March 12, 2020

What Is the PFE and How Do We Use It in Our Trading Methodologies

The Polarized Fractal Efficiency (PFE) is a technical indicator that was developed by Hans Hannula to determine price efficiency over a user-defined period. This indicator fluctuates between -100 and +100, with 0 as the centerline. Securities with a PFE greater than zero are deemed to be trending up, while a reading of less than zero indicates the trend is down. Polarized Fractal Efficiency’s signature characteristic is its use of fractal geometry in determining how efficiently a security’s price is moving.  We use this technical indicator in our Scalp and Zone Methodologies.

The key things to remember about the PFE:

  • PFE is a technical indicator that determines price efficiency over a user-defined period.
  • PFE uses fractal geometry to determine how efficiently a security’s price is moving.
  • The indicator helps traders determine the direction and strength of a trend.

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about the author:

Mike Shorr

Since 1994, Michael has been an on-the-floor market maker, Vice-President of Interest Rate Derivatives for Knight Financial Products and Director of Education and Options Instructor at Trading Advantage. He makes the oftentimes complex world of options and trading accessible to the novice and advanced trader alike. Michael has a Bachelor of Science degree in Statistics and Finance from the University of Illinois Champaign-Urbana. He presently is Director, Trader Education at ProsperTradingAcademy.

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