Polarized Fractal Efficiency: Simple Tool To Be A Successful Crypto Trader

Determining the price efficiency of a crypto asset accurately can assist traders in making informed trading decisions. Did you know there is an indicator exclusively designed for this purpose? Yes, what you have heard is correct. Polarized Fractal Efficiency is a technical indicator used to assess the price efficiency of an asset in cryptocurrency trading. Let’s delve into this indicator. 

1. Polarized Fractal Efficiency: What’s PFE

The Polarized Fractal Efficiency indicator is a special tool for crypto traders. It looks at how well a cryptocurrency’s price is moving over a chosen time. It uses a cool thing called fractal geometry. Cryptocurrency traders use it to figure out where the price is going and how strong the trend is.

1.1. Polarized Fractal Efficiency: What’s Its History

The Polarized Fractal Efficiency indicator was created by a person named Hans Hannula. This indicator was introduced to the world in a magazine called ‘Technical Analysis of Stocks & Commodities’ in January 1994. 

1.2. Polarized Fractal Efficiency: How Does It Works

The Polarizeed Fractal Efficiency indicator is like a scale that goes from -100 to +100, with 0 in the middle. When PFE value is above zero, it means the cryptocurrency’s price is going up. If it is below zero, it means the price is going down.

2. Polarized Fractal Efficiency: How To Calculate It

The formula of PFE is complex.

PFE = 100 * log (CP / LP ) / log (N)

Let’s break down the calculation to four simple steps:

• Take the Current Price: This is the cryptocurrency’s price right now.
• Find the Lowest Price: Identify the lowest price over a certain period.
• Choose a Number (N): It is usually the number of price points in the period you are looking at.
• Calculate PFE: Plug these values into the formula and calculate PFE.

The Concept Behind The Calculation PFE measures how well the price is moving compared to the lowest point in that period.

3. How To Launch PFE on a TradingView chart

Here is how you can launch the Polarized Fractal Efficiency indicator on a TradingView chart.

• Open your TradingView chart.
• Click on the ‘indicator’ button
• In the search bar, type ‘Polarized Fractal Efficiency’ and select it from the list.
• Customise the settings using the settings option if needed (like the period).
• Click the ‘OK’ button.
• The PFE indicator will appear on your chart, showing the trend efficiency.

4. How to Read Polarized Fractal Efficiency

Reading the Polarized Fractal Efficiency indicator is simple:

• When PFE is above o, it means the cryptocurrency’s price is likely to going up.
• If PFE is below 0, it suggests the price is probably going down.

The higher the PFE value above 0, the stronger the upward trend, and the lower the PFE below 0, the stronger the downward trend. 

Also Read: Enhance Your Crypto Trading With Schaff Trend Cycle: A Simple Guide 

Endnote

The Polarized Fractal Efficiency indicator is a valuable tool for crypto traders, helping them understand price trends. Created by Hans Hannula in 1994, it uses fractal geometry and measures price efficiency. You can calculate it using a formula and add it to your TradingView chart for trend analysis. PFE assists traders in making informed decisions in the cryptocurrency market.