LER - Law of Effort vs Results

30 Eyl 2020

Law of Effort vs Results is a tool to find the price changes based on volume.

This tool shows that if there is a high volume occur but the price has small difference in one candle, this will trigger a 'spike'. This spike represents that a high activity has occurred but the price did not reflect as the volume changes.

The analogy of this tool can be represented as we drive a car on a steep hill: despite we hit the gas harder, the car just slightly move higher.

30 Eyl 2020

Sürüm Notları

New update:

The previous release had a loophole, in which the spike has not triggered if a doji has occured (a doji simply means that the open price and close price are equal in one candle).

Since this algorithm use volume / price_difference, the doji will create the price difference becomes zero and lead to the infinity value.

To fix the doji issue, a bid offset has been added with default value of 0.005 (this default value was chosen based on the counter in stock exchange of Malaysia below MYR1).