**Elder Force Index**
Hi,
Note sure if this is the appropriate forum but here goes..
I am trying to write a small software program to calculate Dr Alexander Elder's Force Index but I am having a problem trying to work out how he calculates Force Index 2 day EMA.
I am using example data shown in his book Trading for a Living to work out the algorithm, eg:
Date Close Volume FI FI:2-ema
10/29 25329 3834
10/30 25242 4495 -391065
10/31 25194 1372 -65856 -130807 <-----(1)
11/01 24295 2547 -2289753 -15701105 <-----(2)
Force Index(FI) = Volume[today] * (Close[today] - Close[Yesterday])
Using the formula for Force Index I can successful calculate and replicate the values in the Force Index Column.
In order to calculate (2) I apply the formula Elder gives for EMA earlier in his text:
FI:2-ema[today] = FI[today]*k + FI:2-ema[yesterday]*(1-k)
k = 2/(n + 1) where n is number of days for ema i.e. 2 in this case
and this works fine.
However I can not see how he has calculated (1). It states in the text that when calculating the first value of an ema a simple moving average has to be constructed. Thus I calculated this by summing the first two FI values and dividing this by 2 but this does not provide the answer shown in (1). Obviously I am missing something here and would appreciate it somebody could provide an insight into how (1) is calculated in this
case. |