Rotation Factor

The Rotation Factor is a metric used to measure the intensity of market rotation by counting the number of higher highs and lower lows in a series of price bars. It helps traders identify whether the market is trending or in a state of consolidation.

A positive Rotation Factor indicates a bullish trend, while a negative one indicates a bearish trend. When the factor is near zero, the market is rotating and lacks a clear directional bias.

This tool is useful for quantifying the strength of a trend and identifying when that trend might be losing momentum. It is a simple yet effective way to track the health of a market move.

By monitoring the Rotation Factor, traders can adjust their strategies to match the current market environment. It is particularly valuable in volatile markets where trends can shift quickly.

Understanding rotation is essential for both trend following and mean reversion strategies. It provides a clear, numerical way to view the market's structural behavior.