Volume & money flowElder Force Index · EFI
The smoothed Force Index Alexander Elder actually trades — a short EMA for timing, a long one for trend.
Works in most conditionsEngine-computed on a fixed sample series
What it is
The Elder Force Index, created by Alexander Elder, measures the force behind a price move by combining three pieces of information: the direction of the move, the size of the move, and the volume that accompanied it. The raw idea is that a price change on heavy volume represents a powerful, forceful move, while the same change on light volume is weak and easily reversed. Elder then smooths this raw force with exponential averages to make it tradeable, using a short 2-period average for timing entries and a longer 13-period average to read the intermediate trend of buying and selling pressure. The indicator oscillates around a zero line, positive when bulls are exerting force and negative when bears are. For a beginner, it answers the question, is there real power behind this move, and who is exerting it? It fuses price and volume into a single measure of conviction.
How it is calculated
The raw Force Index for a bar is the change in closing price — the current close minus the previous close — multiplied by that bar's volume. A rising close on large volume produces a big positive number, a falling close on large volume a big negative number, and a flat close or thin volume a small number near zero. Because this raw series is jagged and spiky, Elder recommended smoothing it with an exponential moving average. A 2-period EMA of the raw Force Index produces a hair-trigger short-term line used for timing entries, and a 13-period EMA produces a smoother line that reflects the intermediate-term balance of buying and selling pressure. Both smoothed versions oscillate around zero. The choice of which to watch depends on the job: the 2-period for precise timing within a trend, the 13-period for reading the trend of force itself.
Reading it, step by step
Start with the 13-period line as your trend-of-force gauge: above zero it says bulls are in control of pressure, and below zero it says bears are. The 2-period line is a timing tool rather than a trend gauge, and its most useful reading comes within an already-established trend. In a confirmed uptrend, brief dips of the 2-period line below zero mark short-lived pauses where a pullback has spent itself, offering a low-risk spot to join the trend as it turns back up. Divergence is a powerful signal: if price makes a new high while the 13-period Force Index makes a lower high, the force behind the advance is fading and the trend may be tiring. The magnitude of the readings reflects the power of the moves, but because it scales with price and volume, those levels are specific to each instrument and not comparable across a watchlist.
Best timeframes and settings
Elder's canonical settings are a 2-period EMA for short-term entry timing and a 13-period EMA for the intermediate trend, and these are the standard almost everyone uses. The tool is applied across daily and intraday charts, with the daily being Elder's own preferred canvas for swing trading. Shortening the 13-period line makes the trend read faster but noisier, while lengthening it slows and steadies it; the 2-period line is deliberately hair-trigger and is not meant to be smoothed away. Because the index scales with price and volume, its absolute levels are instrument-specific, so you calibrate what counts as a meaningful reading to each market rather than using fixed thresholds. It depends on reliable volume, so it is best on exchange-traded instruments. The design intentionally pairs a fast timing line with a slower trend line, and that two-line structure is central to using it well.
When and where to use it
The Elder Force Index is usable in any regime but is most powerful within an established trend, where the 13-period line confirms the direction of pressure and the 2-period line times pullback entries. It works best on instruments with trustworthy volume, primarily exchange-traded stocks and futures, and degrades where volume is unreliable. Its great strength is timing entries into an ongoing trend and warning, through divergence, when that trend is losing force. It is weaker as a standalone signal outside a clear trend, because the 2-period line whipsaws badly in directionless conditions. Avoid trading the hair-trigger short line in a range, and avoid comparing raw Force Index levels across different instruments, since the scaling makes them incomparable. Used as Elder intended — a trend read from the slow line and entry timing from the fast line — it is a precise and disciplined tool.
Strategies that use it
The first and signature strategy is Elder's pullback entry: with the 13-period Force Index and the price trend both pointing up, buy when the 2-period Force Index dips below zero and then turns back up, entering into a spent pullback with a stop below the recent swing low. The second is a divergence warning: when price makes a new high but the 13-period Force Index makes a lower high, treat it as a signal that the trend's force is fading, and either avoid new longs or tighten stops on existing ones. The third is a zero-line trend confirmation: use the 13-period line crossing above zero as corroboration of an emerging uptrend and below zero for a downtrend, in agreement with price structure. All three lean on the two-line design, using the slow line for the trend and force read and the fast line for precise timing, and all require reliable volume to work.
Combining it with other indicators
The Elder Force Index is a cornerstone of Elder's own three-screen approach and pairs naturally with a longer-term trend tool and a price-structure read. A weekly or longer moving average, or the MACD, establishes the dominant trend, and the Force Index then times entries in that direction on the daily. It sits well alongside other volume tools such as On-Balance Volume, which confirms whether accumulation or distribution underlies the force, and the Klinger Volume Oscillator, a cousin in the volume-force family. Support and resistance levels give the pullback entries logical stops and targets. Because the Force Index blends price change and volume into conviction, its best partners either define the larger trend it should trade within or corroborate the money flow behind its readings, keeping you from acting on the fast line's noise in isolation.
Where it fails
Even smoothed, the Force Index scales with price and volume, so its levels are instrument-specific and cannot be compared across a watchlist, a distinction beginners often miss. The 2-period line is deliberately hair-trigger and whipsaws badly outside a clear trend, so trading it in a range produces a stream of false signals. The tool also depends on reliable volume, degrading on instruments with poor or synthetic volume data. The classic mistakes are trading the fast line without an established trend behind it, and reading absolute levels as if they were universal thresholds. The fixes are to use the 2-period line for timing only within a trend confirmed by the 13-period line and price structure, to calibrate meaningful levels per instrument, to require trustworthy volume, and to lean on divergence and zero-line context rather than raw magnitude. Anchored to a clear trend, the fast line's sensitivity becomes an asset instead of a liability.
A worked example
Suppose a stock is in a clear uptrend, trading above a rising moving average, and its 13-period Elder Force Index is comfortably above zero, confirming that bulls control the pressure. Today the stock closes at 51 versus yesterday's 50, on volume of two million shares, so the raw Force Index is the one-point gain times two million, or plus two million — a strong positive reading. Over the past few sessions price pulled back modestly, and during that pullback the 2-period Force Index dipped below zero as the short-term selling spent itself. On this bar the 2-period line turns back up through zero while the 13-period line remains positive and price is still above its rising average, giving Elder's textbook pullback entry. You buy, placing a stop just below the recent swing low. Two weeks later price grinds to a marginal new high, but the 13-period Force Index prints a lower high than on the prior push; reading that bearish divergence as fading force, you tighten your stop and protect the gains as the trend begins to tire.