Force index Too GOOD to be TRUE ???

Discussion in 'Technical Analysis' started by InvestVision, Jan 28, 2010.

  1. Here is what this blog author explains about his usage of FORCE Index.

    http://short-termtrading.blogspot.com/2010/01/netflix-inc-nflx-subscribers-rise.html

    The force Index indicator. I used the force index indicator, which is an indicator measuring the force of bulls during uptrends and the force of bears in downtrends. It takes into account price and volume. I applied a 13-day exponential moving average (EMA) of the force index to help track the trend. When the trend is positive, the color is blue; when the trend is negative, the color is red.


    My Question : I do not have Trade Station to verify his BLUE/RED marking of price bars based on Force Index.
    1) But it seems it is TOO good to be true, the BLUE/RED bars indicate LONG trend with good ACCURACY
    2) can somebody with TradeStation verify this RED/BLUE price bars based on FORCE index explained above ?
    3) all this blogger has dozens of charts based on his Force Index with BLUE/RED price bars , all of them indicating very good LONG Trend


    it seems TradeSattion functions forzadown(13) forzaup(13) are used ( by looking at chart on TOP)

    CITI , GOOGLE , etc.. charts ..
    -----------------------------------
    http://short-termtrading.blogspot.com/2010/01/18-likely-to-buy-apple-inc-aapl-tablet.html


    http://short-termtrading.blogspot.com/2010/01/goldman-sachs-group-inc-gs.html

    http://short-termtrading.blogspot.com/2010/01/citigroup-inc-c-76-bln-loss-meets-wall.html
     
  2. i programmed the code of the force index on tradestation using Elder's indications in 'trading for a living'.
    it looks good because lately markets have been very trendy or at least with big swing. it does not work so well in choppy markets. however i like it
     
  3. His visual scheme appears accurate. The question about too good to be true needs to be visited with a fine microscope as macro visual appearances can often be misleading.

    It is pretty simple to plot an almost identical chart in EXCEL and verify for yourself.

    Also you have to be very careful about practical implementation as each calculated point occurs at the close, meaning you couldn't have changed position abruptly without foreknowledge.
     
  4. force index is a fantastic momentum indicator as it relates price with volume. It should not be used alone but along with other indicators such as moving averages. When used with price action, it places high probability trades but again as always please respect stop loss and don't be greedy.
     
  5. Force Index is a good indicator. You may compare it to MFI (Money Flow Index), yet FI has better performance since it includes some volatility factor in its calculations - bigger change usually noted during the periods of higher volatility. Basically, this is one of the rare indicators that analyse volume, price direction and price change (volatility) at the same time. You may see the results of straightforward scan for Force Index for different stocks on various time-frames at
    Force Index
     
  6. oraclewizard77

    oraclewizard77 Moderator

    Can you create one for me to try in NT?