The Efficiency Index Indicator Will Change How You See the Chart? [FREE DOWNLOAD]

[00:01] Looking at this upward movement on the chart, tell me: is the price moving efficiently or is it just making noise? Because there is a huge difference between a movement that goes up in a practically straight line and a

[00:16] movement that goes up full of wasted energy along the way. And it is precisely this difference that determines whether or not it is worthwhile for you to trade that movement. It was precisely to measure this quality that Perry Kalfman created it. The

[00:31] efficiency indicator. Wow, Pio, that name doesn't sound unfamiliar to me. Yes, it's the same creator of Kaffman's moving average that I

[00:43] was simple, yet extremely powerful. He wanted to create a mathematical way to answer that question. Is the price moving efficiently or just making noise? And to answer that question, he

[00:58] created the efficiency index indicator. And in today's lesson, I'm going to show you three things: how the efficiency ratio indicator works in its classic form, and how to interpret this indicator in day trading. And, of course, the version that I

[01:12] adapted to my operational style, and I even transformed the signals of this indicator into colors. Everything, of course, is free to help you with day trading. So come with me, man. What is the logic behind the efficiency index indicator

[01:27] ? Look, before we talk about configuration or anything else, you first need to understand the logic behind this indicator. Imagine the following scenario: the price starts here and drops almost in a straight line 300

[01:41] points in the mini-index. Notice that this movement is almost without recoil. In this case, the movement was efficient. Now imagine another scenario. The price also fell 300 points in the mini-index,

[01:56] but along the way it does this: look, it goes up, it goes down, it goes up again, it goes down, it goes back and forth several times. In other words, he arrived at the same final point, geez, he left point A and reached point B, but wasting

[02:10] a lot of momentum along the way. And that's exactly what the efficiency index measures. He compares two things. How much did the price move from point A to point B, plus how much did it travel along the way? So this

[02:23] indicator can distinguish between two situations. He can identify efficient price movements, where the price moves with more direction, and he can also identify noisy movements, where the price zigzags across the chart.

[02:38] So that's the logic behind the efficiency indicator. How to interpret the efficiency index indicator? Hey, now let me show you how this indicator appears on the chart in practice. Look, when you insert the

[02:52] efficiency index indicator into the chart, it comes up with three main colors: green, yellow, and red. Each of these colors represents the quality of the movement at that moment. When the indicator is red, it means that the

[03:06] market is very noisy, that is, the price may be moving in an upward or downward direction, but it is full of zigzags, full of back and is typically the type of market where breakouts fail most frequently.

[03:20] Now, when the indicator turns yellow, it means the market is in an intermediate zone, so there's a stronger movement happening. This displacement, of course, can be either high or low, but it is still a

[03:32] movement. Now, when the indicator turns green, it means that the price is moving in a much more efficient way, that is, the market is managing to move with less wasted movement. These

[03:47] are typically the sections where the price starts to move in a more directional way, with less zigzagging on the chart. Then the practical reading becomes very simple. Indicator in red, market full of noise. Indicator in yellow,

[04:01] intermediate zone. The price is moving more strongly, but still in a very erratic manner. Indicator in green. Cleaner and more efficient movement. This is how this indicator helps to see when the

[04:14] movement is of good quality and when it is not . Now that you understand the logic of the indicator and how to interpret it, let me show you on the chart how it is typically used in the classic way.

[04:27] How to use the efficiency index indicator in the classic version? Dude, the truth is that this indicator wasn't created with day trading in mind. It is most commonly used in swing trading, especially on the daily chart. But when it's

[04:41] used in classic day trading, it 's usually used on timeframes of 15 minutes or more. That's in the classic form, of course. So, we're here at the mini-index, on the 15- minute timeframe. Okay, so first we go

[04:54] indicators, search here for the efficiency index indicator, we'll insert it in a new window and it will appear like this , but we'll double-click on it and go to appearance and change it here, look,

[05:07] the line to histogram and we'll click OK. Ready. Thus, we have the efficiency indicator, the classic version. I studied several classic setups that utilize the efficiency index. And the most

[05:21] going to present now. This candle right here, look, marks the start of trading on March 10, 2026. And the first step in this classic setup is to identify

[05:33] whether the market is efficient or not. And we do this, obviously, through the efficiency index indicator. For now, the bars here are closing yellow and red, meaning we don't have efficient

[05:47] price movements right now. So, we need a green closing bar to know that the price here in the mini-index, on the 15-minute chart, is moving efficiently. So, we just keep

[05:59] waiting. And look, finally we had a candle that closed with a bar on the indicator, demonstrating efficiency. So, we already have the first step of the classic setup; we already know that the market here on the

[06:12] 15-minute timeframe is moving efficiently. The next step is to determine whether this efficient movement is bullish or bearish. And in the most interesting classic setup I've studied, we use the Doncha channel in its

[06:25] default configuration. So we take a buy order and place it on the breakout of the upper part of the donch channel, and we take a sell order and place it on the breakout of the

[06:37] lower part of the donch channel, and we wait for the market to define itself. We already know it's effective, as you can see, if the price breaks through the believe the movement will continue. And look, the next candle would

[06:52] trigger our buy order, because the price broke through the upper part of the Doncha channel, showing that we can therefore believe in the continuation of the movement. And we'll keep believing in this continuation of the

[07:04] movement as long as the indicator is demonstrating efficiency. What the indicator is telling us is that the price will likely rise efficiently, with almost no pullback. And that's what he's doing, as you

[07:16] can see, until the moment this candle right here, look, closed, causing us to have a yellow bar on the efficiency index indicator, demonstrating that the efficiency of the movement, that the quality of the movement,

[07:30] ended. But during that movement, man, while the indicator was showing efficiency, the price went up more than 1200 points in the mini-index, a very strong movement. So, you, the classic trader, if you liked

[07:44] this setup, which is also a classic setup, you could open the trade in this way, as I showed in the breakout, in this case, of the high of the Doncha channel, when the indicator shows efficiency. And if you want to manage

[07:57] the stop using a trailing stop, you could use an ETR stop. So, for example, we'll place an ETR stop here with a D1 deviation, because that's the 15-minute timeframe, right? So , after the buy order is

[08:10] triggered, you could place your stop loss on the trailing stop loss, the ETR stop loss, and keep monitoring the ATR stop loss until it becomes a winning stop loss, right? And the price would hit, look, your winning stop right up here. In this operation, you would make around 400

[08:24] points. Alternatively, after opening this breakout trade, you could simply monitor the efficiency index indicator until it closes a yellow bar, and then you could exit the trade. It's also a

[08:37] way for you to conduct this operation in this classic setup. Man, even though it's a classic setup, I found it extremely interesting. The only problem I see is the lack of signs, right? We have very few

[08:49] signs. The signal I just showed was on March 10th, and now let's look here, on March 5th was another signal that we were able to identify, from the opening of trading on March 5th until

[09:02] this moment here, an efficiency index indicator did not demonstrate efficiency, right? He did not demonstrate any quality movements. In reality, it was only when this candle here closed that we became efficient. As you can see, the

[09:16] indicator closed with a green bar. Beauty? Observing this, then, following the classic setup with the Doncha channel, we could place a Doncha channel and a buy order at the top of the Doncha channel and

[09:30] wait for the price to decide which way it will go. We already know that price has an which side it's on, right? We would be waiting. my sell order. So, we would already know that the direction the price

[09:44] decided to go is the downtrend, right? The downward movement indicates that the indicator continues to demonstrate efficiency. Although the efficiency, you've noticed that the price has pulled back a bit, right? But the indicator

[09:59] continues to show efficiency, so we would continue the operation until the candle closes and the histogram bar closes in yellow. But this movement here, man, would be a movement of almost 1000 points. Do

[10:13] you understand? Look, 940 points in this sales transaction. Another very strong movement with many points that this classic setup caught at the beginning of the mini-tournament, right, in March, on March 5th. But like I said, man, there are very few signs.

[10:27] The indicator shows few signs of efficiency on the 15- minute timeframe, right? The other sign we had, right, the third sign we had this month of March was right here, look, on March 3rd. So, when

[10:39] that candle closed here on March 3rd, from the very first moment, we already had, look, the indicator demonstrating efficiency. I would place bottom of the Doncha channel, and I would place my buy order at the

[10:52] wait for the price to define which way it would go. It would most likely be the downside , right? Because the price closed below the central average here, wait as long as the indicator continued to demonstrate efficiency. Look, we're waiting

[11:06] until the sell order is triggered upon breaking through the lower part of the Don channel. And I would continue conducting this operation as long as the indicator, look, how this classic setup works. Look, the pressure kept dropping, dropping,

[11:20] dropping until it started losing efficiency, it began to retreat, and look, the indicator is closing in yellow. When this candle closed, this move was very efficient, as

[11:33] you can see, and it would have yielded around 3700 points in the mini-index. Of course too. This whole thing is a white elephant; it doesn't happen all the time. This rarely happens here. And on that

[11:48] day, March 3rd, man, that sharp drop happened because of all the tension between the United States, Israel, and Iran, you understand? Because of this, we had this strong movement right at the beginning of March, but in any

[12:01] case, the indicator did its job. The indicator proved efficient, and the setup successfully generated a good entry signal. So, man, if you look for notice that there are few signals, but many of them work, like

[12:15] here too, look, the indicator was showing low efficiency the whole time. From that point on, it began to demonstrate high efficiency. The price broke through the upper part of the

[12:27] donche channel, triggering the buy order. And then we could continue this operation until a candle causes the indicator to turn yellow, as it did here. So this would be another operation in the mini-indical that would have

[12:40] generated more than 1000 points. This is a good classic setup. This is the classic setup that I found most interesting, but it's important that you remember the following. This setup, man, has been withdrawn from the American market. It was created and

[12:53] developed for the international market. So, you need to test this extensively in the mini-index and mini-dollar markets to know if this indicator, this classic setup, works in the domestic market. Beauty?

[13:07] I'm simply presenting the setup that I studied, learned, and found interesting. Now, whether statistically it tends to work or not on the 15-minute timeframe of the mini-index is up to you to test. I'm

[13:21] just sharing the information with you, and you need to draw your own conclusions, okay? But in any case, we were able to identify several good operations. Okay, so here's the thing , man. That wasn't the only

[13:33] classic setup I learned, though. I learned several other classic setups. I've already presented one that I found most interesting. And now I'm going to show you learned through my studies, which I

[13:45] use two timeframes in this classic setup. And this classic setup would work as follows. On the right side here, we use the 15-minute timeframe for the mini-index with the efficiency ratio indicator and

[13:58] also a nine-period moving average. And on the left side we can use a shorter time frame like 5 minutes, 2 minutes. This is the 2-minute timeframe graph. The idea is this: if a candle closes above the moving average, and

[14:12] the indicator shows efficiency here on the 15- minute chart, we should then turn our attention to the shorter timeframe, in this case, the 2-minute chart. And here we were going to open our

[14:25] operations. It could be done with moving average crossovers, MACD crossovers, doncha channel breakouts, as I just showed, or you could simply use an inside candle. Simply search here in the

[14:39] Profit Chart color palettes for "inside candle". You then insert it into the chart, click add, and click OK. And all the yellow candles that appear here on the 2-minute chart are inside candles. So, to repeat, if here

[14:52] on the 15-minute chart a candle closes above the moving average with the efficiency index, demonstrating the quality of this movement, it means that buy. In this case, we could buy on the breakouts of the candles that

[15:06] are yellow, because candles that are yellow are inside down . So I would place my buy order, look, on the breakout of the base test high. Look, one buy transaction here, another buy transaction here

[15:18] . Look, this way, man, we could get more entry signals, since we're working on a shorter timeframe. And of course, we would only open operations until the point where an indicator stopped demonstrating

[15:31] demonstrate efficiency today with this candle right here. So, from this point on, we would no longer open buy positions because the indicator would no longer be a purchase operation would look like in this classic setup. Now, of course

[15:45] , if the price closes below the moving average with the efficiency index indicator showing quality, as is the case here, look, on the 15-minute chart on March 5th, here on the 2-minute chart, I would

[15:59] only trade the breakouts of the inside candles. So, for example, I could inside candle, or I could sell here, or I could sell here, look, on the breakout of this inside candle, believing in the continuation of the

[16:12] downtrend. And I would do that, of course, until the indicator stopped showing efficiency, which in this case is at the close of this candle right here, look. So, when that candle closed, I would stop short selling, because the

[16:24] indicator would be showing that the efficiency had ended. So, those were the efficiency had ended. So, those were the two most interesting classic setups I studied, which utilize an efficiency index indicator. But I

[16:36] repeat, these setups were removed from the international market. You need to test it to see if it really works in the domestic market as well, in mini- index and mini-dollar contracts. Is everything alright, man? How to use the P Trader version in practice?

[16:50] Hey, now's the time to break away from the conventional a bit, right? So, first thing, I transformed the signals from this indicator into a color-coding rule. And you'll notice that I've simplified this coloring rule. Look, the

[17:03] simplified this coloring rule. Look, the candles will only turn green or yellow, exactly, no red candles. I did this to simplify things. If the candles are yellow, we don't have an efficient movement. If the candles

[17:15] are green, we have an efficient movement according to the indicator. Full stop. So, since we have the simplified efficiency index coloring, as I just showed you, we can remove the indicator here in the

[17:29] coloring. And for that, man, we need to click on the candles twice first. We come here, look, in appearance, make the negative color black, the positive color white. We clicked OK. And now, we've

[17:42] right-click on the chart, and then select " Insert Color Rule." Simply search for efficiency index, Corill Trader. We insert it here in the graph, click OK, and here is the efficiency index color

[17:56] . As I said, we don't have any red candles here, we only have yellow and green candles. Yellow candles represent inefficient movements, while green candles represent efficient movements, as identified

[18:10] by the efficiency index indicator. Let's focus solely on the coloring then. So here 's the thing, the possible setup I've come up with is for a 1- minute timeframe on the mini-index. And of course, my friends, we're going to resort to good old

[18:23] moving averages divided by a cube wire. So here we have 17 periods, cube wire. So here we have 17 periods, 34 periods, 72 periods, 144 periods, 34 periods, 72 periods, 144 periods, 305 periods, and finally 610

[18:37] periods. All of these moving averages are exponential with a shift of one. It's always good to remember that it was the master Billiams who brought cube wire to the market . I made a full video here on the channel , focused solely on this, using

[18:52] moving averages divided into fi cubes. Take a look over there. Continuing, in this possible setup I would use a risk- reward ratio of 300 points for the stop loss, a 150- point target, a daily positive goal of two consecutive wins, and a daily green limit

[19:05] of one stop loss. Pio, I don't like risk-negative returns. No problem, man. It's just one possible setup. You are free to make your changes. If you want to create a trend-following setup using the

[19:18] efficiency index color, that's up to you . This potential setup is geared towards my operational profile. And the idea behind this potential setup, man, is really, really simple. Here's the thing. If we go to the market and observe that the green average

[19:33] is above all averages, 34 periods above 72, 72 above 144, periods above 72, 72 above 144, 144 above 305, 305 above 610, we will consider that the trend is purely upward, right? If we already know

[19:48] that the trend is purely upward, then if any candle closes green here, we know that we have an efficient upward movement. I would then place a buy order with a 300-point stop loss and a 150-point alpha at the low of the

[20:02] green candles. In this case, our purchase order would be triggered at this out of the deal. That would be the first profit of the day. I would between the lows of the candles until the order was triggered. And he realizes that the

[20:16] other purchase order would be triggered here later on. Look, as long as the averages were still crossing upwards, this candle closed in the green. We would candle, okay? Sia activated here. And up here the price would be taken from the operation. That

[20:29] would be their second win of the day. And in that case, folks, I, Pio, would already be off the chart, and only come back on the next trading day. Oh man, P, I don't like operating like this . I like to trade on candle breakouts and hold the trade, right?

[20:43] for example, up to here, when the candle closed yellow, then I would come back here exit when that candle closed yellow. This is how I like to operate. No problem, man. I'm simply demonstrating a possible setup here that

[20:58] matches my operational profile. You are not obligated to operate in this way, obviously. Now, one observation I would make regarding this potential setup is the following. Look, it's right here at the beginning of this trading session, isn't it? The trend was

[21:12] upward. Let's say you were to perform this operation back here, it would be a win. If you had done that other operation back here, you would also have made a profit. And then you decided to do this other operation here. Look, place your buy order at the low of

[21:24] it, man. But if the next candle closes in the yellow color, like it did here , you should quickly cancel your buy order. You can't keep your order positioned if you have yellow candles, OK? Because

[21:37] this demonstrates that the quality of the movement has ended. That's the observation I would make in a purchase transaction, okay? Now let's look at a sell signal. Look, a sell signal here on March 5th would occur at the high of this

[21:50] candle right here. Look at this, because if you observe from this point that I've highlighted with this arrow, see, from here the candles started to show a downward trend, because all the averages are crossing downwards in the

[22:02] correct sequence, as you can see. Look at this, man, it's a cube! The averages are all showing a clear downward trend. So here you would place a sell order at the high of that candle, in this possible setup.

[22:15] point, look. And down here the price would reflect the operation. So in this case, you would have your first profit of the day. The other operation that was actually sell order would be placed at the high of that candle. That's because, of course,

[22:29] the averages are showing a downward trend and this candle closed, right? In the green color, we would place our sell order. Look, between the highs, the green candles, right, the candles that closed green, below all the

[22:41] averages here of the cube, we would position ourselves until the sell order triggered here, look, at this point, and down here the price would exit the trade. Look here, that would be the second win of the day. We would then have a

[22:54] positive target achieved in this potential setup. I would close the chart and only come back on the next trading day. Pi, I don't like operating like this . I like trading breakouts, you know. and keep holding up the operation. Dude, it's up to you, okay? I'm

[23:07] this idea I'm demonstrating cultivates a new setup in your mind that suits you, great, my work here is done. So, what I want is to stimulate your creativity even while using this efficiency index indicator

[23:21] . But anyway, man, if you liked this possible setup, put those moving averages on the chart, add that color, and start testing. Draw your own conclusions. I'm not telling you that this

[23:34] setup works. I said it's a possible setup. You need to test how to download and install an INC efficiency indicator in Profit Chart. Hey, listen up now . An INC efficiency indicator is a bonus I'm giving away for

[23:50] free to anyone who participates in my Telegram group, "From Zero to Proprietary Desk Week" . I repeat, this group is free. And the "From Zero to going to host here on YouTube, where I'll show you in practice that it's possible to

[24:05] start day trading even if you have little money. I'm going to show you how I started with R$274, the strategies I used, the robot that helped me with my trades, and how I managed to pass

[24:19] both the beginner and advanced exams on proprietary trading desks. And within the Zero Week proprietary trading group, you receive the INC efficiency indicator file as a free bonus to install in your Profit

[24:32] Chart. And to download it, it's simple: click on the first link in the description, join my free Telegram group, and there you will find the efficiency index indicator. After you download it, open Profit Chart, go

[24:45] import/export, select the INC efficiency indicator file , import it into your Profit Chart, it will show "strategies imported successfully" and that's it, you can insert the indicator into the chart

[25:00] without any problems. Simple as that. And of course, I'll also include both the efficiency index indicator and the indicator's color in the group. So, there are two free files within the "Week from Zero" group, the

[25:14] proprietary table, and more bonuses are coming soon. So join my free group, you have nothing to lose. Now it's your turn, buddy. Play around with this indicator, with this color scheme, test it on different timeframes, observe how

[25:26] the chart behaves when the movement is efficient, and also when it's full of noise. Try combining the efficiency index with other tools, breakouts, doncha channels, inside bars, test a lot of things. Who

[25:41] knows, maybe the initial efficiency indicator will end up becoming a tool that will accompany you for years in day trading. You 'll only find out if you try it. So, to repeat, if you want to download this indicator and also the coloring ready

[25:54] for you to use in Profit Chart, the files are available for free proprietary trading desk. The link is in the description of this video and also in the first really put a lot of effort into bringing this well-structured indicator to you.

[26:09] So if you think this content is worthwhile, please leave a like, activated, because I won't rest until you become a successful trader. I'll be staying here, man, and see you in the next video.

[26:22] Dude, to prove that it's possible to start on day 3 with little money, I took R$ 274 and took the AXA proprietary trading desk exam. And I passed on my first try, without taking any losses, without improvising, using only a

[26:35] simple and objective strategy, the Pilsar 400. And after being approved, man, I automated that strategy. I turned her into a robot. And I left that robot running automatically on the proprietary trading desk for a month, while

[26:49] I went about my life until that robot hit its monthly target. And to show you and deliver all of this to you, I've created a free three-lesson event here on YouTube. This week, from zero to the owner's table. Dude, I'm going to show you

[27:02] how I passed this test on my first try using this strategy of mine and then this robot of mine. And in the first lesson of this free event, you'll see the complete plan I put together to start day trading with just 274.

[27:18] You'll see the operations I performed in full during the Axia exam, how the Pilsar indicator and coloring work, which is the basis of the Pilsar 400 strategy and also the robot. And of course, you'll be able to download and test a pulse indicator and

[27:33] color pulsar for a certain period to see if it matches your operational profile. In the second lesson, you 'll see the complete setup of the PSAR 400 strategy, the step-by-step operation of the strategy, the

[27:46] backtests, all the trades I made, and the performance report that proves its approval by Axia. Finally, in the third and final lesson, you will see the configuration of the Pilsar 400 strategy robot. You will see the

[28:01] operations recorded in real time with this robot until it reaches the monthly goal on AXIA. You'll also see the performance report for this robot and you'll be able to download and test the robot that automates my strategy for the SAR 400.

[28:15] So, if you want to learn a simple, replicable, and practically validated method , click the link below and I'll guarantee your spot, okay? I'll see you in your spot, okay? I'll see you in class.