Rotation Factor is a sentimental indicator used in Market Profile to Indicate who is control (Buyers/Sellers) in the market for the day. If the rotational factor prints positive values every day then it mean buyers are in control in the market. Negative Values indicates sellers are in control. Same principle can be applied to investing as well.
How Rotation Factor is Calculated?
1)Rotational Factors Starts with Zero on the first bar
2)In the next bar onwards the Rotational Factor is calculated as shown below
|Current Bar makes High High and Higher Low||+2 points|
|Current Bar makes Low High and Lower Low||-2 Points|
|Current Bar makes Higher High and Lower Low||0 Points|
|Current Bar makes Lower High and Higher Low||0 Points|
|Curr High and Prev High is Equal and Higher Low||+1 Points|
|Current Bar Makes Higher High but Curr and Pre lows are equal||+1 Points|
|Current Bar Makes Lower High and Current and Prev Equal Lows||-1 Points|
|Current Bar Makes Equal Curr and Prev High and Lower Lows||-1 Points|
So the rotation factor for each and every bar takes values ranging from +2 to -2. And During the day you should keep tracking of the running (cumulative) total of the rotation factors.
3)cumulatively Rotational Factor is calculated and plotted in 30min timeframe as shown below
Sample Principle Can be applied to Monthly Charts also. Here in this case Rotational Factors Starts with Zero on the first day of the month and varies cumulatively for each and every day.
RCOM Futures – EOD Charts