Home > Technical analysis > Indicators and oscillators > Polarized Fractal Efficiency (PFE)
Polarized Fractal Efficiency (PFE)
The Polarized Fractal Efficiency - PFE indicator - draws on Mandelbrot and fractal geometry to depict how pricing moves between 2 points during a definite time period. The more linear and efficient the price fluctuation, the shorter the distance the prices must move. Hans Hanula created the Polarized Fractal Efficiency indicator.
The PFE indicator is used for calculation of how trendy or overloaded the price action is. PFE < 0 means that the trend is down. PFE > 0 indicates that the trend is up. The higher the reading, the "trendier" and more efficient the upward movement will be. Readings around zero show jerky, less efficient shift and a balance between demand and supply.
A hooking pattern often happens right before an efficient period finishes when the PFE appears to have maxed out, turns in the contrary direction towards zero, and then makes one last attempt at maximum efficiency.
Stay with the trade all the way to the other extreme, unless it slows around the zero line. If it slows around zero, exit the trade and wait for a new maximum efficiency entry. Trades can be entered in the opposite direction, with a stop just beyond the extreme of the hook.