OutsiderEdge - Adaptive Node Efficiency Function (ANEF)

Overview - What is ANEF?
ANEF is a zero-centered oscillator that blends price efficiency, effective volume around VWAP (node proximity), order-flow imbalance (uptick/downtick proxy), and returns volatility into a single, normalized score. The goal is to help you spot efficient breakouts and inefficient mean-reversions in a way that’s transparent, systematic, and easy to align with your own analysis.

Users can combine ANEF’s components to build rules such as: “Only consider short breakout signals when trend context is bearish and the ANEF score pushes into the Efficient Zone,” or “Look for mean-reversion setups when the ANEF score sinks into the Inefficient Zone while trend context remains bullish.”

While ANEF can stand on its own, it also works well as a secondary confirmation layer to a user’s primary process (volume profile, price action, S/R, market structure, or your preferred overlays).

🔹 FEATURES

Below is each ANEF component/feature in the order that typically leads to the most confluence.

1. ANEF Core (Normalized Score)
   
   Combines a price change term with effective volume near VWAP and order-flow imbalance, scaled by volatility and normalized into a zero-centered oscillator.
   
   Read it like a pressure gauge: high positive values = efficient upside impulse risk; deep negative values = inefficient pressure that often reverts.
   
   
2. Efficient & Inefficient Zones (Thresholds)
   
   Two user-set levels (default ≥ +4.6 and ≤ −4.6) to quickly see when ANEF pushes into efficient breakout territory (top zone) or inefficient territory (bottom zone).
   
   Thresholds are not overbought/oversold; they’re contextual “efficiency bands.”
   
   
3. 2nd-Signal Confirmation (Optional)
   
   An opt-in rule to ignore the first signal of a type and only print the second occurrence within X bars (default 6).
   
   Reduces one-off noise without repainting or lookahead.
   
   
4. Trend Context (EMA-based Wave, Optional)
   
   A lightweight EMA context that lets you filter signals (e.g., only show ▼ in downtrend, only show ▲ in uptrend).
   
   The context is plotted as a sub-pane wave centered around zero so it doesn’t fight for price-panel space.
   
   
5. Clean Alerts (Raw & Confirmed)
   
   Raw alerts fire at zone interactions.
   
   Confirmed alerts respect the 2nd-signal rule and (optionally) the trend filter.
   
   
6. Price-Panel Markers (through force_overlay)
   
   Even with the oscillator in a separate pane, ANEF can print mini markers on the main chart.
   
   Useful to correlate impulses/reversions with structure, S/R, or higher-TF levels.
   

🔹 USAGE

In the examples below, you see chart snapshot with five labeled points of (in)efficiency breakouts.


UK100

Point 1 — Efficient Downside Breakout (▼)
ANEF surges into the Efficient Zone, indicating downside momentum that’s aligned with node volume/imbalance and volatility. Typical use: trend-following continuation, takeprofit on existing long or tightening risk on existing shorts (invalidations above recent structure).

Point 2 — Inefficient Upside Reversion (▲)
First rebound after the selloff with ANEF deep in the Inefficient Zone. Not an ideal long entry on its own, but a good management cue: take partial profits on shorts or tighten stops as an early confirmation that the drop may be exhausting.

Point 3, 4 and 5 — Inefficient Upside Reversion (▲)
Another 3x ▲ appears as price forms a higher low and ANEF prints a less extreme negative reading. With the “second-signal within X bars” option enabled, this becomes a more credible mean-reversion attempt. Possible long entries or takeprofits on existing shorts.

Trading involves substantial risk. This tool is for educational purposes only and is not financial advice. Past performance does not guarantee future results. You are solely responsible for your trading decisions and risk management.

🔹 NAVIGATING MARKET CONDITIONS

Trending phases:

Expect more time in or near the zones in the trend direction.
Consider allowing only trend-aligned signals (filter ON) and using counter zone exits for trail/partials rather than counter-trend trades.

Ranging phases:

Expect frequent dips and surges into the (In)efficient Zones and back.
Counter-moves (▲ in range downs, ▼ in range ups) can be productive with tight invalidation and the 2nd-signal rule to reduce noise.

Regime shifts:

Watch for repeated failures of one side’s signals plus cross-pane confluence (e.g., context flips while ANEF re-anchors around zero).

That sequence often marks transitions where your rules should adapt (e.g., disable the trend filter temporarily or widen your 2nd-signal window).

🔹 SETTINGS SUMMARY

• ANEF Core: lengthPrice, lengthVol, lengthVolat, imbalanceCap
  
  
• Zones: Efficient (≥), Inefficient (≤)
  
  
• Confirmation: Require 2nd signal, Lookahead bars
  
  
• Trend Filter: Enable, EMA length, optional smoothing & “only show ▲/▼ with trend”
  
  
• Chart Markers: Also show on main chart (force_overlay)
  
  
• Alerts: Raw vs Confirmed (pick what suits your workflow)
  

🔹 GOOD PRACTICES

Treat signals as context cues, not as mechanical buy/sell calls. You can align ANEF with structure (S/R, HTF bias, LVN, HVN or POC) and risk management (partials on zone exit, invalidation beyond recent swing). Start with defaults; tweak parameters to match your market/TF.


🔹 LIMITATIONS / DISCLAIMER

• ANEF does not use lookahead and does not repaint, but no indicator guarantees outcomes.
  
  
• Thresholds are heuristics; markets can remain efficient/inefficient longer than expected.
  
  
• Use appropriate position sizing and independent validation.
  

Trading involves substantial risk. This tool is for educational purposes only and is not financial advice. Past performance does not guarantee future results. You are solely responsible for your trading decisions and risk management.

Release Notes

v1.0 — Initial invite-only release with: normalized ANEF core, Efficient/Inefficient zones, optional EMA trend context, 2nd-signal confirmation, raw & confirmed alerts, and optional price-panel markers via force_overlay.