EFW Analytics is based on the principle “We trade because there are patterns in the financial market”. EFW Analytics is a set of tools for improving trading efficiency by detecting repetitive fractal geometric patterns in the financial market (the fifth pattern). EFW Analytics is one of several tools that support trading logic without the need for testing on history. The tool consists of three parts:
- Equilibrium Fractal Wave Index – the index of the equilibrium fractal wave. Research tool to support trading logic
- Shape Ratio Trading System is the shape factor. Trading system 1
- Equilibrium Fractal Wave Channel – an equilibrium fractal wave channel. Trading system 2
The index is an analytical tool. It is used in the same way as the Hurst exponent, named after Harold Edwin Hurst (1880-1978), and the fractal dimension introduced by Mandelbrot in 1975. The EFW index helps to confirm the presence of equilibrium fractal waves in the financial market. However, the index of equal fractal waves is more practical and intuitive when trading compared to those mentioned above. The index value varies from 0.0 to 1.0 or more. The higher the value, the more significant the presence of a certain form of equilibrium fractal wave. If the index is below 0.2, the form factor can be ignored when trading.
The first method of using equilibrium fractal waves in trading is the form factor. Its use is similar to trading on Fibonacci levels or extensions. But there are a few differences. When trading on the form factor, we are not limited to the Fibonacci coefficients. In addition, we do not take for granted that each coefficient will behave the same regardless of the financial instrument. With that said, the coefficients are selected using the EFW index.
Using the EFW channel is not difficult. You can use the proportional trigger method described in the book “Financial Trading with Five Regulations of Nature: Scientific Guide to Price Action and Pattern Trading “(Trading in financial markets using five natural laws: Price Movement and Pattern Trading”, 2017, Young Ho Seo).
The following modes are available:
- Shape trading ratio – the aspect ratio
- Equilibrium fractal wave channel – equilibrium fractal wave channel
- Shape ratio trading Equilibrium fractal wave (EFW) channel
- Shape ratio trading Price Breakout Pattern Scanner
- Equilibrium fractal wave channel Harmonic Pattern Plus (or Harmonic Pattern Scenario Planner)
- Shape ratio trading or EFW channel Mean Reversal Supply Demand
- Shape ratio trading or EFW channel Elliott Wave Trend
The indicator allows you to select up to three form coefficients for trading. Some important input parameters are listed below.
- Set false to switch off EFW Channel-if false, disable the EFW channel
- Timeframe to detect patterns – the timeframe for detection of patterns
- Max number of patterns to display – the maximum number of patterns to display
- Pattern Index – index of the initial pattern
- Trigger Margin for channel-width of the channel trigger value
- Trigger Margin for Shape ratio-width of the trigger value when trading by the shape coefficient
- Enable sound alert – sound alert
- Send email if pattern is found-email notifications
- Send notification if pattern is found – push notifications
- Use white background for chart – if false, the chart background is black
- Amount of bars to scan for pattern search – number of bars to search for the pattern
- Pattern Update Frequency – the frequency of the pattern update
- EFW Index Period – the period for calculating the EFW index
- Shape ratio 1, 2, 3 – shape ratio (0.1-1.0)