Forum Archive Index - May 2001

[Phaedrus <Phaedrus@techemail.com>]

Snoopy,
The PFE indicator was developed by Hans Hannula. It was introduced in the January 1994 issue of "Technical Analysis of Stocks and Commodities" magazine. As an engineer, programmer, and trader with over 30 years market experience, Mr Hannula developed a unique approach to applying the laws of fractal geometry and chaos to the markets. Drawing on the work of mathematician Benoit Mendelbrot, Mr Hannula developed an indicator to gauge the efficiency with which prices travel between two points in time. The more linear and efficient price movement, the shorter the distance prices travel between two points. The more "squiggly" the price movement, the less efficient its travel. The primary use of the PFE indicator is as a trend indicator. PFE readings above zero mean that the trend is up. The higher the reading, the "trendier" and more efficient the upward movement. PFE readings below zero mean that the trend is down. Readings around zero indicate choppy, less efficient movement, with a balance between the forces of supply and demand.
Normally viewed as a graph, I converted this to a "trend ribbon" along the bottom of the chart to avoid clutter and keep it simple. Green >0 Red <0
Phaedrus.

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