Efficiency Ratio Indicator: Basics of Analysis

The "Efficiency Ratio" (ER) indicator is a powerful tool in the trader's arsenal, helping to assess the effectiveness of price movement of an asset. It measures how efficiently the market overcomes the price within a given time period. The higher the ER value, the more efficient the movement is considered. The indicator is useful for identifying trends and making trading decisions. When the ER value is low, the asset shows weak volatility and high risks. Using the ER helps traders analyze market behavior more accurately and manage risks.