Elder's force index is a volume based oscillator indicator
As a volume based oscillator indicator,
Elder's force index indicator was created by Alexander Elder to help traders know the direction of the market by measuring the power of bull or bear movement based on price and volume. As a volume based indicator, elder's force index is based on centerline and divergence.Just like in other oscillator indicators, elder's force index has an oscillation at point 0.00.
 
 
Elder's force index price movement is based on three key components,namely;
 
-Direction      - Extent          - Volume.
 
According to Alexander elder,the values of 
Elder's force index is therefore calculated using the following formula;
 
 
Elder's force index= (Today's close - yesterday's close)* today's volume.
 
 
Therefore ,Based on centerline,it therefore follows that when the Elder's force index rises above 0,that will be an indication of an upward trend market thus the cryptocurrency  trader should be trading upwards while when the elder's force index falls below 0 that will be an indication of a downward trend market thus the cryptocurrency trader should be trading downwards. Since elder's force index mostly emphasize on divergence, the bullish and bearish market for cryptocurrency can further be explained as follows;
 
1. Elder's Force index cryptocurrency bullish
 
Based on divergence it therefore follows that when the price is moving downwards while the elder's force index is moving upwards,the price will reverse and start moving in the same direction upwards as the elder's force index. This will signals the cryptocurrency trader to purchase a given amount of cryptocurrency. The trader can either place a market buy order or they can place a limit buy order. The market buy order will be processed instantly while the limit buy order will be processed when the market reaches their limit buy order price. This is indicated as from below;
 
 
 
 
 
The above represents the TRX market in terms of USDT. Two points are being indicated. There is point A and point B. Point A is the elder's force index while point B is the divergence point. At point B, the market is moving downwards while the elders force index is moving upwards. The market then reverse and start moving in the same direction upwards as the elder's force index thus signaling the cryptocurrency trader to purchase a given amount of TRX with their USDT balance. The trader can place a market buy order which is being processed immediately or they can place a limit buy order which will be executed when the market reaches their limit buy order price. When their order is being processed,their account will start increasing in value in terms of USDT if the market is moving in the same direction upwards as the elder's force index.
 
2. Elder's Force index cryptocurrency bearish
 
Based on divergence it therefore follows that when the price is moving upwards while the elder's force index is moving downwards,the price will reverse and start moving in the same direction downwards as the elder's force index. This signals the cryptocurrency trader to sell a given amount of cryptocurrency which he had previously purchased and is currently holding to avoid declining the value of their account. The trader can either place a market sell order or they can place a limit sell order. The market sell order will be processed instantly while the limit sell order will be processed when the market reaches their limit sell order price. This is indicated as from below;
 
 
 
 
The above represents the TRX market in terms of USDT. Two points are being indicated. There is point A and point B. Point A is the elder's force index while point B is the divergence point. At point B, the market is moving upwards while the elders force index is moving downwards. The market then reverse and start moving in the same direction downwards as the elder's force index thus signaling the cryptocurrency trader to sell a given amount of TRX which he had previously purchased and is currently holding.  The trader can place a market sell order which is being processed immediately or they can place a limit sell order which will be executed when the market reaches their limit sell order price. When their order is being processed, their trading account will have increased in value in terms of USDT.
 

cryptocurrency market is a highly volatile market. As a cryptocurrency trader,whenever you place a buy order,always make sure to apply risk management so that whenever your buy order goes against you, your account do not depreciate so much in value.

 

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