PZ Lopez Efficiency MT5

PZ Lopez Efficiency is a MetaTrader 5 indicator that rates how purposeful recent price movement has been. Instead of showing direction, it shows whether the market is travelling somewhere or just wandering inside a range.

How it works

For a chosen number of bars, the indicator works out a typical true range, which is the average high-low range including gaps. It then compares this with the absolute net distance price actually covered over the same window. The result is a ratio: how many typical ranges the market has moved in total. A value near zero means price went back and forth and ended up close to where it began. A larger value means price covered real ground in one direction.

Reading the values

• Below 1: price is making little net progress, so conditions are choppy or sideways.
• Above 1: some directional behaviour is starting to appear.
• Above 2: movement is clearly effective and directional.
• Above 3: the move is stretched, and a pause or pullback becomes more likely.

These levels are rules of thumb rather than laws. Test them on the instruments you trade, because volatility behaves differently across markets.

Colours

The line changes colour as the reading moves between zones. Broadly, one colour points to conditions that favour positional approaches, another to range-style trading, and a third to trend-following. Use the colours as a quick visual filter, and check the exact thresholds in the indicator inputs and on your chart.

Markets and timeframes

The calculation uses only price bars, so it can be applied to forex pairs, indices, metals, commodities or any other symbol your broker offers in MT5. It also works on every timeframe. Bear in mind that a short period on a low timeframe will fluctuate quickly, while a long period on a higher timeframe will change slowly.

Settings

With only one input, optimisation is simple, but avoid fitting the value too closely to one stretch of history. Compare several periods across different market phases.

Practical use

• Use it as a filter: take trend setups only when the reading shows directional movement.
• Switch to range tactics, or stand aside, when the reading stays low.
• Treat very high readings as a caution that the move may be tiring.

Risk

Installation

1. Download the file from your account and unpack it if it is zipped.
2. In MT5, choose File, then Open Data Folder.
3. Open MQL5, then the Indicators folder, and copy the indicator file into it.
4. Restart MT5 or right-click Navigator and choose Refresh.
5. Drag the indicator from the Navigator onto a chart and set the period.

If the line does not appear, confirm that the chart holds enough history for the period you selected and that indicators are allowed to run in your terminal.