Jurik CFB Adaptive, Elder Force Index w/ ATR Channels [Loxx]Jurik CFB Adaptive, Elder Force Index w/ ATR Channels is a variation of Elder Force Index that better adapts to trends by calculating dynamic lengths for the traditional Elder Force Index calculation. ATR channels are added to show levels of price extremes or exhaustion of price either up or down. Elder Force Index is typically used for spotting reversals on the weekly timeframe.
What is the Elder Force Index?
Dr. Alexander Elder is one of the contributors to a newer generation of technical indicators. His force index is an oscillator that measures the force, or power, of bulls behind particular market rallies and of bears behind every decline.1
The three key components of the force index are the direction of price change, the extent of the price change, and the trading volume. When the force index is used in conjunction with a moving average, the resulting figure can accurately measure significant changes in the power of bulls and bears.1 In this way, Elder has taken an extremely useful solitary indicator, the moving average, and combined it with his force index for even greater predictive success.
What is Composite Fractal Behavior ( CFB )?
All around you mechanisms adjust themselves to their environment. From simple thermostats that react to air temperature to computer chips in modern cars that respond to changes in engine temperature, r.p.m.'s, torque, and throttle position. It was only a matter of time before fast desktop computers applied the mathematics of self-adjustment to systems that trade the financial markets.
Unlike basic systems with fixed formulas, an adaptive system adjusts its own equations. For example, start with a basic channel breakout system that uses the highest closing price of the last N bars as a threshold for detecting breakouts on the up side. An adaptive and improved version of this system would adjust N according to market conditions, such as momentum, price volatility or acceleration.
Since many systems are based directly or indirectly on cycles, another useful measure of market condition is the periodic length of a price chart's dominant cycle, (DC), that cycle with the greatest influence on price action.
The utility of this new DC measure was noted by author Murray Ruggiero in the January '96 issue of Futures Magazine. In it. Mr. Ruggiero used it to adaptive adjust the value of N in a channel breakout system. He then simulated trading 15 years of D-Mark futures in order to compare its performance to a similar system that had a fixed optimal value of N. The adaptive version produced 20% more profit!
This DC index utilized the popular MESA algorithm (a formulation by John Ehlers adapted from Burg's maximum entropy algorithm, MEM). Unfortunately, the DC approach is problematic when the market has no real dominant cycle momentum, because the mathematics will produce a value whether or not one actually exists! Therefore, we developed a proprietary indicator that does not presuppose the presence of market cycles. It's called CFB (Composite Fractal Behavior) and it works well whether or not the market is cyclic.
CFB examines price action for a particular fractal pattern, categorizes them by size, and then outputs a composite fractal size index. This index is smooth, timely and accurate
Essentially, CFB reveals the length of the market's trending action time frame. Long trending activity produces a large CFB index and short choppy action produces a small index value. Investors have found many applications for CFB which involve scaling other existing technical indicators adaptively, on a bar-to-bar basis.
What is Jurik Volty used in the Juirk Filter?
One of the lesser known qualities of Juirk smoothing is that the Jurik smoothing process is adaptive. "Jurik Volty" (a sort of market volatility ) is what makes Jurik smoothing adaptive. The Jurik Volty calculation can be used as both a standalone indicator and to smooth other indicators that you wish to make adaptive.
What is the Jurik Moving Average?
Have you noticed how moving averages add some lag (delay) to your signals? ... especially when price gaps up or down in a big move, and you are waiting for your moving average to catch up? Wait no more! JMA eliminates this problem forever and gives you the best of both worlds: low lag and smooth lines.
Ideally, you would like a filtered signal to be both smooth and lag-free. Lag causes delays in your trades, and increasing lag in your indicators typically result in lower profits. In other words, late comers get what's left on the table after the feast has already begun.
Elderforceindex
Elder's force index impulseForce Index is an oscillator. It combines volume with prices
to discover the force of bulls or bears behind every rally or decline.
It brings together three essential pieces of information the direction of price
change, its extent, and the volume during that change. It provides a practical way of
using volume for making trading decisions.
Force Index can be used in its raw form, but its signals stand out much more
clearly if we smooth it with a moving average. Using a short EMA of Force Index
helps pinpoint entry and exit points. Using a longer EMA helps confirm trends.
Efi long > 0 (bullish trend) and efi short < 0 = buy signal (green bar)
Efi long < 0 (bear trend) and efi short>0 = sell signal (red bar)
