Elder Force Index

This is a discussion on Elder Force Index within the Technical Analysis forums, part of the Methods category; Hi, Note sure if this is the appropriate forum but here goes.. I am trying to write a small software ...

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Old Jun 17, 2008, 10:02am   #1
 
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Joined Apr 2008
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.
iaincmm is offline   Reply With Quote
Old Jun 17, 2008, 1:35pm   #2
Joined May 2008
The Elder Force Index: Take the daily closing price and the daily volume. The daily price change is calculated as the daily closing price minus the prÚvious day's closing price. This daily price change is then multiplied by the day's volume. The index is simply an exponatial moving average over some specified period of the daily price change multiplied by the volume.

Hope this help!
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Old Jun 17, 2008, 8:53pm   #3
 
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Joined Apr 2008
iaincmm started this thread
Quote:
Originally Posted by Victor90 View Post
The Elder Force Index: Take the daily closing price and the daily volume. The daily price change is calculated as the daily closing price minus the prÚvious day's closing price. This daily price change is then multiplied by the day's volume. The index is simply an exponatial moving average over some specified period of the daily price change multiplied by the volume.

Hope this help!
Yeh thanks for. Ok I tried that but can't get the results to match the numbers above. I am either calculating it wrong or numbers are wrong, on balance it is probably the former! Anyway anyone kind enough the work the above numbers?

Cheers
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Old Jun 17, 2008, 9:13pm   #4
Joined May 2008
I have never calculated Elder Force Index manually, however this is what i think it should look like:

Elder Force Index=EMA((price_today - price_yesterday)*todays_volume)

I think what you did wrong was that you took ema on all the diffrent parts when its suppose to be EMA of the whole sum.
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Old Aug 1, 2008, 12:07pm   #5
 
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Joined Jul 2008
Not Able to Get It

Hi,

I tried working out, but i was not able to get the answer , can u please take an example with the values he has used and get the answer , I am able to get FI , but not able to get FI-2Ema Column

Quote:
Originally Posted by iaincmm View Post
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 -1570105 <-----(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.
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