Force Index Case Study

There are a total of 8 trades. 2 were losses.

The average gain is not too much to shout about. However, if you look at the chart, the gains will be much more if you do a trailing stop to lock in the profit.

Therefore, if you want to use Force Index for shorting, there is a need to look at where to set your profit target and stop loss level to extract the maximum benefits out of this indicator.

Today I will introduce to you an interesting indicator developed by Dr Alexander Elder. This is the Force Index Oscillator.

By definition,

Force Index Oscillator = (Close[today] – Close[yesterday]) * Volume[today]

I have applied the following rules:

Enter Short Position :

1. Price must be lower than 22 day exponential moving average of the daily closing price today.


2. The 22 day exponential moving average of the daily closing price must be decreasing for the past 2 days.


3. The 13 day exponential average of the force index oscillator crosses the zero line today


4. If condition 1 to 3 is true, open a short position at the market open on the next day.

Exit Short Position :

1. If position is showing a loss of 10%, close the trade or

2. If the 13 day exponential average of the force index oscillator is less than zero, close the trade