How it works
Force Index multiplies the change in the close by the bar's volume. That single product carries three pieces of information at once: the sign says which side won, the magnitude of the price change says how decisively, and the volume says how many participants were involved. Alexander Elder's argument was that all three are needed — a large move on no volume and a small move on huge volume are both weak in different ways, and only their product captures that.
The raw series is far too noisy to read, so it is always smoothed with an exponential average. Elder proposed two settings with genuinely different jobs. The two-period version is a short-term tool: in an established uptrend, a dip in the two-period force index below zero marks a pullback where sellers briefly took control, which is where he looked to add to longs. The thirteen-period version is a trend tool: its position relative to zero describes which side has held the balance of force over the last few weeks.
Using them together is the intended method and is what distinguishes the indicator from the rest of this family. The long version supplies the regime and the short version supplies the timing inside it, which sidesteps the usual problem of oscillators giving counter-trend signals in a strong trend. A negative two-period reading is only interesting when the thirteen-period reading is positive.
Extremes matter as much as sign. A force index reading far beyond anything in recent history usually marks a climax: an enormous move on enormous volume is the shape of capitulation or of a blow-off, and it frequently coincides with the end of a leg rather than its continuation. Divergence between the thirteen-period line and price at swing extremes is the third standard read.
The obvious weakness is scale. Because the output is a price change multiplied by a volume, it is expressed in units that mean nothing and grow as an instrument's price and turnover grow. There is no fixed overbought level and no comparability between symbols; the only usable comparison is against the same instrument's own recent history.
Calculation
The arithmetic in words, in the order it happens.
Raw force index for a bar is the change in the close — current close minus previous close — multiplied by the bar's volume. The sign comes from the direction of the move, the magnitude from the size of the move and the amount traded together. That raw series is extremely noisy, so it is smoothed with an exponential moving average before plotting; Elder's short-term setting is 2 periods and his intermediate setting is 13, with 13 the common charting default. The smoothed line oscillates around zero, and zero is reached when the smoothed product of price change and volume is balanced.
Source
An AlgoBeamScript implementation of the formula above, written by us from the arithmetic so the code and the calculation agree line for line.
Runs unchanged on the platform and in the AlgoBeamTS runtime. The language reference is in the documentation.
Inputs
Defaults are the values most charting packages ship with. They are conventions, not optimal settings — the right length depends on your instrument and your holding period.
| Input | Default | What it changes |
|---|---|---|
| Length | 13 | Period of the exponential average applied to the raw force series. 13 gives the intermediate-term line whose sign describes which side holds the balance of force. Setting it to 2 gives Elder's short-term version, which is used for pullback timing inside a trend rather than for direction. |
| Source | Close | Which price the bar-to-bar change is measured on. The close is the convention because it is the settled price; using the typical price makes the line marginally smoother but breaks the comparison with published rules. |
How to read it
What practitioners take from the plot. Read these as descriptions of market state, not as entry signals.
- 2-period force index dipping below zero in an uptrend
- A pullback in which sellers briefly took control while the larger trend is intact. Elder's own entry condition, and only valid when the 13-period line remains positive.
- 13-period force index above zero and rising
- The balance of price change weighted by volume has favoured buyers over the last few weeks. A regime reading, used to filter which direction of setup to take.
- A reading far beyond anything in recent history
- Climactic force — an enormous move on enormous volume. It often marks the end of a leg rather than its continuation, particularly after an extended run.
- Price at a new high with the 13-period line at a lower peak
- The force behind the newest high is weaker than behind the last one. A quality warning about the advance, not a reversal trigger on its own.
Limitations
Where this indicator misleads. None of these are fixed by a better parameter.
- The output is unbounded and expressed in meaningless units — currency multiplied by shares — so it cannot be compared between instruments, and its own historical extremes drift as a stock's price and turnover change over the years.
- A single earnings gap or index event produces a reading that dwarfs everything around it and then distorts any visual comparison with previous extremes for months.
- The 2-period version is genuinely noisy and generates many signals that go nowhere when it is used without the 13-period filter, which is exactly how most people use it.
- It needs reliable volume and a meaningful close, so it is unusable on spot forex and unreliable on twenty-four-hour instruments where the bar boundary is a data-provider convention.
Educational reference. This page explains how an indicator is built and how it is commonly read. It is not investment advice, not a recommendation and not a signal service. No indicator is profitable on its own — each is a way of describing a market, and any rule built on one has to be tested with realistic costs before it is traded.