The Kaufman Efficiency Ratio forex MT4 indicator fluctuates between 0 and 1 indicator readings.
Kaufman is useful to detect overbought and oversold market conditions.
Use this indicator together with a trend-following technical analysis indicator to make a complete trading solution.
The EUR/USD H1 chart below displays the Kaufman Efficiency Ratio forex indicator in action.
Basic Trading Signals
Signals from the Kaufman forex indicator needs to be used together with a trend-following indicator such as the 200 EMA:
Trend up (price above the 200 EMA)? Buy when the Kaufman indicator reaches 0 reading (oversold – buy on dips).
Trend down (price below the 200 EMA)? Sell when the Kaufman indicator reaches 1 reading (overbought – sell on rallies).
MT4 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 4
Type: chart pattern
Customization options: Variable (ERperiod, histogram, shift) Colors, width & Style.
Time frames: 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week, 1-Month
Copy and paste the kaufman-efficiency-ratio.mq4 indicator into the MQL4 indicators folder of the Metatrader 4 trading platform.
You can access this folder from the top menu as follows:
File > Open Data Folder > MQL4 > Indicators (paste here)