In 1995 Perry Kaufman introduced the concept of Efficiency Ratio (ER) in his book ‘Smarter Trading’.
Although not something you should bother about, the Efficiency Ratio is calculated by dividing the change in price over a specified period by the total sum of the price movements that transpired to attain that change.
The Efficiency Ratio Super Signals MT5 forex indicator shows us the direction of the market.
In order to spot market conditions, the MT5 indicator includes self-adjusting levels in a bid to make it easier to determine the current state and change of the market.
It’s the color changes of the undotted line within the Efficiency Ratio MT5 indicator window that assesses trend changes, along with the market bullish/bearish direction.
The indicator works for scalping, day trading and swing trading.
The EUR/CHF H4 chart below displays the Efficiency Ratio Super Signals Metatrader 5 forex indicator in action.
Basic Trading Signals
Buy Signal: Go long when the ascending line of the Efficiency Ratio Metatrader 5 custom indicator turns deep sky blue.
Sell Signal: Go short when the descending line of the Efficiency Ratio Metatrader 5 forex indicator turns orange red.
Exit buy trade: Close all buy orders if while a bullish trend is running, the line of the forex indicator turns dark gray.
Exit sell trade: Close all sell orders if while a bearish trend is ongoing, the line of the forex indicator turns dark gray.
Tips: The Efficiency Ratio Super Signals can be deployed as a standalone trading indicator or combined with other technical indicators or even with price action techniques.
MT5 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 5
Type: chart window indicator
Customization options: Variable (ER period, Price, Smoothing period, Levels period), Colors, width & Style.
Time frames: 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week, 1-Month
Type: trend | oscillator
Copy and paste the Efficiency ratio directional levels.ex5 indicator into the MQL5 indicators folder of the Metatrader 5 trading platform.
You can access this folder from the top menu as follows:
File > Open Data Folder > MQL5 > Indicators (paste here)