LER - Law of Effort vs Results
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.
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.
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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).
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).