Trend Efficiency Framework — Strategy by AIScripts
By AIScripts
Performance Metrics
- Author: AIScripts
- Symbol: NASDAQ:MSFT
- Timeframe: 3 minutes
- Win Rate: 37.4%
- Profit Factor: 1.233
Description
OverviewNot every trend develops with the same characteristics. Some trends move steadily with limited pullbacks, while others experience frequent reversals and uneven price movement.This framework studies trend efficiency, which describes how directly price moves from one point to another over a selected period. Instead of measuring only trend direction, it evaluates how consistently that movement develops.The objective is to provide an additional perspective on trend behaviour that can be used alongside other forms of technical analysis.Core IdeaThe framework compares the market's overall progress with the total distance travelled by price.A trend is considered more efficient when price moves consistently in one direction with relatively small pullbacks.A trend is considered less efficient when price frequently changes direction, creating larger swings without making significant overall progress.Strategy LogicNet MovementThe framework measures the overall price change across a selected lookback period.Total MovementThe total movement is calculated by summing the absolute price changes from one bar to the next.Efficiency ScoreThe efficiency score is calculated as:Net Price Movement ÷ Total Price MovementHigher values indicate that price has moved more directly.Lower values indicate that price has travelled a greater distance while making less overall progress.Trend FilterMoving averages are used to define the primary market direction.Long opportunities are evaluated when:The trend is upward.The efficiency score exceeds the selected threshold.Short opportunities are evaluated when:The trend is downward.The efficiency score exceeds the selected threshold.Risk ManagementATR-based stop-loss and target levels are used to adapt risk parameters to changing market volatility.FeaturesTrend efficiency measurementDirectional trend confirmationVolatility-adjusted exitsConfigurable efficiency thresholdResearch-oriented frameworkIntended UseThis framework is designed to study how efficiently trends develop over time.It may be used to compare different markets, symbols, and timeframes while exploring the relationship between trend quality and price movement.DisclaimerThis script is provided for educational and research purposes only. It demonstrates one approach to measuring trend efficiency using Pine Script. It does not predict future market behaviour and should be independently tested before being incorporated into any trading workflow.