Forecasted Price Index
Forecasted Price Index (FPI) is designed to help you forecast where the current candle will close. The idea behind this indicator can be explained in the next steps:
- FPI depends on Wilder Plus & Minus Direction Indices (PDI & MDI) with Average True Range (ATR).
- If PDI is greater than MDI, then the next trend direction is forecasted to the upside.
- If PDI is less than MDI, then the next trend direction is forecasted to the downside.
- If trend forecast is to the upside, then the next predicted close price is the last bar close plus half ATR value times MDI.
- If trend forecast is to the downside, then next predicted close price is the last bar close minus half ATR value times PDI.
How to use FPI
- Use FPI predicted price as a target for your trades.
- Trade in the direction of the predicted price.
- If price did not hit FPI target before the end of the current candle, then close the trade, by another mean use FPI as a time stop loss.
- TimeFrame - calculation timeframe (use a higher timeframe than the current one).
- FPIPeriod - period used in calculation (default is 14).
- FPIWidth - indicator's line width.
- FPIColor - indicator color.
Researches have proven that price candles will hit FPI over 80% on average but this does not guarantee success in trading with this tool. So, please use this tool with caution and proper money management.