The Force Index, developed by Alexander Elder, is a trend indicator that attempts to determine the current buying and selling activity in a stock. Values above 0 indicate a current buying trend, while values below 0 indicate a selling trend. The Force Index uses both the change in closing prices and volume in its calculation.
The force index is calculated by subtracting yesterday's close from today's close and multiplying the result by today's volume. If closing prices are higher today than yesterday, the force is positive. If closing prices are lower than yesterday's, the force is negative. The strength of the force is determined either by a larger change in price or a larger volume; either situation can independently influence the value and the change in force index.
The raw value of force index is plotted as a histogram, with the center line set to zero. A higher market will result in a positive force index, plotted above the center line; a lower market points to a negative force index, below the center line. An unchanged market will return a force index directly on the zero line. The raw line that is plotted over the day-to-day on the histogram forms a jaggedness and the Smoothing period smooths the line.