Volume & money flowForce Index · FI
Price change times volume — a single number combining direction, size, and participation of a move.
Works in most conditionsEngine-computed on a fixed sample series
What it is
The Force Index, created by Dr. Alexander Elder, is an oscillator that measures the power behind a price move by combining three things into a single number: the direction of the move, its size, and the volume that accompanied it. A big price change on heavy volume represents a forceful, conviction-driven move, while the same price change on light volume is weak and suspect — the Force Index captures that distinction in one reading. For a beginner, it answers the question, how much real power was behind this move, by rewarding large price changes backed by heavy participation and discounting those that are not. It oscillates around a zero line, positive when buyers dominate and negative when sellers do. Elder considered it one of the most useful tools for gauging the strength of a rally or decline.
How it is calculated
The raw Force Index for a bar is the change in price from the previous close to the current close, multiplied by the current bar's volume. If price closes higher than yesterday on strong volume, the result is a large positive number; if it closes lower on strong volume, a large negative number; and if volume is light, the reading stays small regardless of the price change. This simple product fuses direction (the sign of the price change), magnitude (the size of the change), and participation (the volume) into one value. The raw index is extremely jagged because volume and price changes both jump around bar to bar, so in practice it is almost always smoothed with an Exponential Moving Average — a short 2-period EMA for timing signals and a longer 13-period EMA for trend assessment, the two versions Elder actually trades. The smoothing turns the spiky raw line into something readable.
Reading it, step by step
The raw Force Index is centred on zero, with large positive spikes marking powerful buying and deep negative spikes marking powerful selling, so it is read mostly for those spikes and for divergence against price. The short 2-period smoothed version is used for timing: when it dips below zero in an uptrend it flags a pullback and a buying opportunity, and when it rises above zero in a downtrend a selling opportunity. The longer 13-period version acts as a trend gauge — staying above zero confirms bullish force, below zero bearish force, and its crossing of zero can mark a shift in the balance of power. A classic and potent reading is divergence: price making a new high while the Force Index makes a lower high warns the rally lacks power, and the mirror warns a decline is losing steam. On the raw line specifically, a huge spike into a new price high on climactic volume often signals exhaustion rather than strength.
Best timeframes and settings
Elder's standard settings are the 2-period EMA for short-term timing and the 13-period EMA for intermediate trend, applied to daily charts for swing trading. The tool works on any timeframe that carries reliable volume data, which makes it excellent on stocks and futures and trickier on spot forex where volume is only a proxy. The raw, unsmoothed index is too noisy to trade directly and is used mainly to spot spikes and divergences, so the choice of smoothing length is the real setting decision — shorter for entries, longer for trend, exactly the responsiveness-versus-noise trade-off. Lengthening the EMA smooths the line and delays signals; shortening it speeds them up but adds whipsaw. Because the index scales with each instrument's price and volume, its absolute numbers are not comparable across symbols, so read shape and zero-line crossings rather than raw values.
When and where to use it
The Force Index is most valuable on instruments with trustworthy volume — individual stocks, ETFs, and centrally traded futures — where the participation component is real rather than estimated. It is useful in both trending and ranging markets, though its jobs differ: in trends the 13-period version confirms the trend and the 2-period version times pullback entries, while in ranges divergences warn of failing pushes at the extremes. It is less reliable in markets without genuine volume, such as spot forex, where tick volume is only an approximation. Avoid trading the raw line directly; its value lives in the smoothed versions and in divergence. Use it as a confirmation and timing tool layered on price analysis rather than as a stand-alone signal.
Strategies that use it
Elder's signature strategy uses two Force Index versions together: identify the trend with a rising 13-period EMA (or a rising longer moving average of price), then use the 2-period Force Index dipping below zero as the trigger to buy the pullback within that uptrend, stopping below the recent low. The mirror short setup wants a downtrend and the 2-period Force Index popping above zero on a bounce. A second strategy trades divergence — when price makes a new high but the Force Index makes a conspicuously lower high, you prepare to fade the move as buying power fades. A third watches the 13-period Force Index crossing zero as a signal that the intermediate balance of power has shifted, using it to bias your positioning. In each case the Force Index times or confirms an entry defined within a trend context.
Combining it with other indicators
The Force Index pairs naturally with trend tools that supply direction. A moving average or the Elder Impulse System, both Elder creations, tells you which way to lean, and the 2-period Force Index then times entries in that direction. Because it already contains volume, it complements price-only oscillators like the RSI or Stochastic without duplicating them — a Force Index divergence confirming an RSI divergence is a strong combined warning. Support and resistance or Fibonacci levels give the location for a Force-Index-timed entry. On-Balance Volume or the Klinger oscillator can corroborate the volume story from a different angle. The key is to combine it with a directional or structural tool, since the Force Index measures power but not, by itself, the trend it should defer to.
Where it fails
The raw index is far too noisy to trade directly, and beginners who act on its every spike are chewed up by whipsaw — its value only emerges after smoothing. Because it scales with each instrument's own price and volume, its absolute numbers mean nothing across symbols, so comparing a Force Index of 500,000 on one stock to another is a mistake; only shape, zero crossings, and divergence travel between instruments. On assets without real volume data, such as spot forex, the participation input is only a proxy and the readings are correspondingly less trustworthy. Divergences, as always, can appear early and repeatedly in a strong trend, so fading the first one is dangerous. The defences are to trade the smoothed versions, read relative shape rather than absolute value, prefer instruments with genuine volume, and confirm divergences with price action before acting.
A worked example
Suppose a stock in an uptrend, with its 13-period Force Index comfortably above zero confirming bullish power, pulls back for two days. Yesterday it closed at 50.00; today it closes at 49.20 on volume of 3 million shares, so the raw Force Index is (49.20 minus 50.00) times 3,000,000, which is minus 2,400,000 — a negative reading reflecting the down day. The 2-period smoothed Force Index dips below its zero line during this pullback, which, within a confirmed uptrend, is Elder's textbook buy trigger: the trend is up, the short-term force has swung temporarily negative, and you buy the dip near 49.20 with a stop below the recent swing low at 48.40. Price resumes its climb, the 2-period Force Index swings back above zero, and the 13-period version stays positive throughout, confirming the trend never broke. Had the stock instead made a new price high while the 13-period Force Index carved a lower high, you would have read that divergence as fading buying power and grown cautious rather than adding to longs.