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INDICATORS · EFFICIENCY RATIO

Efficiency Ratio in Crypto: Why the Value Changes Before Candle Close

Kaufman's efficiency ratio divides net price change by the total path travelled. A directional live bar raises both, but the net change more.

By ChartsPod Editorial Team · Reviewed by ChartsPod Research
Published · Updated · 5 min read

Short answer

Efficiency ratio (ER) = |close − close N bars ago| ÷ Σ |bar-to-bar changes| over N. ER near 1 means a straight move; near 0 means noise. On the live bar, a move in the trend's direction adds to both numerator and denominator: with net change 500 and path 2,000, ER is 0.25; a further 400 move in the same direction makes it 900 ÷ 2,400 = 0.375. ER feeds KAMA, so KAMA's speed inherits this sensitivity.

Which part of Efficiency Ratio uses the live bar

ComponentUses current bar?Effect intrabar
Net change (N)YesMoves with live close
Path lengthYesAdds |live change|
ERYesRises on directional moves

A move against the net direction lowers the numerator and raises the denominator, so ER drops faster than it rises.

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How much it moves inside one bar

Efficiency Ratio during one bar (illustrative)Efficiency Ratio during one bar (illustrative): OPEN: ER 0.25; MID: +400 with trend: 0.375; LATE: Reversal; CLOSE: 0.28.OPENER 0.25MID+400 with trend: 0.375LATEReversalCLOSE0.28
Only Efficiency Ratio's closing value is kept in history. Original ChartsPod editorial graphic.
Illustrative intrabar range of Efficiency Ratio vs its closed valueIllustrative intrabar range of Efficiency Ratio vs its closed value: ER before move 0 ; ER after +400 0 .ILLUSTRATIVE INTRABAR RANGE OF EFFICIENCY RATIO VS ITS CLOSED VALUEER before move0ER after +4000
How far Efficiency Ratio travels inside a bar versus between bars. Original ChartsPod editorial graphic.

Rules

Efficiency Ratio signal hygieneEfficiency Ratio signal hygiene: Signals on closed bars; Bar-close alerts; Backtest uses the same rule; Live value labelled provisional; Settings identical across chart and alerts.EFFICIENCY RATIO SIGNAL HYGIENESignals on closed barsBar-close alertsBacktest uses the same ruleLive value labelled provisionalSettings identical across chart and alerts
Closed values are what history shows. Original ChartsPod editorial graphic.

Related: Kaufman Adaptive Moving Average in Crypto: Why the Value Changes Before Candle Close (KAMA).

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Questions readers ask

What is the efficiency ratio?

Net change divided by total path.

Why does it jump intrabar?

Directional moves raise the net change more than the path.

Which indicator uses it?

KAMA.

Sources and methodology

Indicator formulas are standard definitions; live-versus-closed behaviour follows TradingView's repainting documentation. Values in examples are illustrative.

  1. TradingView Pine Script: Repainting — live vs historical calculation.
  2. ChartsPod indicator reference — indicator calculations.

This article explains research tools and workflows. It is not financial advice, does not recommend buying or selling any asset and does not predict prices. Crypto derivatives carry a risk of rapid and total loss of margin.

CHARTSPOD EDITORIAL EDITION · RESEARCH AND EDUCATION ONLY · NOT FINANCIAL ADVICE.