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Herrick Payoff Index

Herrick Payoff Index (HPI) confirms strong trends and helps to determine a moment when they change their direction, it also tracks prices, volume of trades and open interest (current liabilities), combining them into one parameter.

In MetaTrader 5, Herick Index can be displayed as a histogram or a linear chart for all trading instruments for which open interest is transmitted. Current liabilities or open interest represents the total volume of effective contracts (futures, options) for which there have been no calculations yet. In MetaTrader 5 it is displayed as "Open Interest" in "Details" tab of the "Market Watch" window.


Features

  1. Easy to use - it does not have any complicated parameters.
  2. Color and levels of the indicator as well as the vertical scale are set via standard menu of the setup window.
  3. The indicator can be displayed as a histogram or a linear chart.
  4. The indicator has an autonomous (independent from the indicator) on-line drive of minute history of the open interest which is saved in a file.
  5. One trading instrument has only one on-line drive, though you can download several Open Interest and Herrick Payoff Index indicators.
  6. The file is saved in a shared folder of all terminals, so accumulated history, necessary for plotting indicators, will be available in all terminals of MetaTrader 5.
  7. History files are sorted for each trading server and instrument. They are refilled until any terminal has at least one Open Interest or Herick Payoff Index indicator on a corresponding contract and trading server.
  8. Accumulated history is available for plotting indicators on any time frame. Please note that a minute history of open interest should be enough for at least two bars to display Herick Payoff Index.


Inputs

  1. Draw type - type of displaying the indicator. It is set to histogram by default. You can select a linear indicator.
  2. One cent move - scaling ratio; unitary cost of changing the price of 1 cent. Herick recommends applying number 100 for most of commodities. The only exception is Silver, for which 50 is recommended. It is set to 100 by default.
  3. Multiplying Factor - multiplying factor necessary for exponential smoothing the index. Small values result in a sensitive short-term indicator. Large values result in a slow long-term indicator. The parameter's purpose is similar to P or Period parameter for exponential moving average. The default value is 10.


Indicator Buffers

Indicator Buffer Number Contents
0 Index value on a corresponding bar/candle of the main chart
1 Index of the indicator color (See Colors section)


Colors

Standard version of the indicator has following rules of index coloring.

  1. Yellow - index value is zero.
  2. Red - index value is below zero.
  3. Blue - index value is above zero.

Colors can be changed in the setting window of the indicator.


Herrick Payoff Index Interpretation

HPI measures the capital inflow and outflow from the market. It helps to find out when powerful traders secretly buy up or sell out assets. If the index is above zero, volume of funds coming on stream grows (sign of bulls). If the index is below zero, outflow of funds is observed (sign of bears). But the strongest HPI's signals are generated in case of its divergence with prices (see example in the screenshot).

You can also have other signals using HPI. Their description is freely available on the Internet or, for example, in Alexander Elder's Trading for a Living.

The product can be modified and amended. Visit What's new tab to know about changes.
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