FTB-C000331 / Formula component

Directional Change

Directional Change is the absolute difference between the current input and the lookback-start input.

Also known asnet lookback change

Foundation Formula defined 1 linked topicPublished

Definitions

In plain terms

It forms the numerator of Kaufman's efficiency ratio.

Technical

The endpoints, input adjustment basis, valid-observation counting, and missing-value policy must match the path-length denominator.

Scope

It ignores the route taken between the two endpoints.

Formula

Directional change = abs(x_t - x_(t-n))
LaTeX: DC_t=|x_t-x_{t-n}|
SymbolMeaningUnit
x_tcurrent inputinput unit
x_(t-n)lookback-start inputinput unit

Output unit: input unit

Examples

  • A governed lesson uses Directional Change only with declared inputs, timing, parameters, and edge-case behavior.

Common misconceptions

  • It ignores the route taken between the two endpoints.

Concept relationships

Related

Required by

Where this concept is used

Tutorials planned

These catalogued topics use this concept, but their complete build has not shipped yet.

  • D07-F01-A08 Important

Evidence and governance

  1. Kaufman Adaptive Moving Average TA-Lib · first party technical publication

    Supports: preferred label, short definition, technical definition, formula

    Limits: Implementation seeding, readiness, and parameter defaults must be frozen for reproducible parity.

Reviewed by
fintech-builder-batch-006
Last reviewed
2026-07-27
Next review
2027-07-27
Record status
published
Written by

Fintech engineer building market-data and financial systems, and the author of every article, glossary record, and reference implementation on The Fintech Builder.