Efficiency Ratio (ER)

// Licensed under the Apache License, Version 2.0
// © mihakralj
//@version=6
indicator("Efficiency Ratio (ER)", "ER", overlay=false)

//@function Calculates Kaufman's Efficiency Ratio as signal-to-noise measure
//@param source Series to calculate from
//@param period Lookback period for efficiency measurement
//@returns ER value (0 to 1) where 1 = trending, 0 = choppy
//@optimized O(1) per bar using dual circular buffers with running sum
er(series float source, simple int period) =>
    if period <= 0
        runtime.error("Period must be greater than 0")

    var int p = math.max(1, period)

    // Close buffer: stores source values for signal (net change over period)
    var array<float> closeBuf = array.new_float(p + 1, na)
    var int closeHead = 0
    var int closeCount = 0

    // Noise buffer: stores |change| values for running sum
    var array<float> noiseBuf = array.new_float(p, na)
    var int noiseHead = 0
    var float noiseSum = 0.0

    var float prevVal = na

    float current = nz(source)

    // Compute bar-to-bar absolute change
    float absChange = not na(prevVal) ? math.abs(current - prevVal) : 0.0

    // Update noise running sum
    float oldNoise = array.get(noiseBuf, noiseHead)
    if not na(oldNoise)
        noiseSum -= oldNoise
    noiseSum += absChange
    array.set(noiseBuf, noiseHead, absChange)
    noiseHead := (noiseHead + 1) % p

    // Update close buffer
    if na(array.get(closeBuf, closeHead))
        closeCount := math.min(closeCount + 1, p + 1)
    array.set(closeBuf, closeHead, current)

    // Get close from period bars ago
    int oldIdx = (closeHead - p + p + 1) % (p + 1)
    float oldClose = array.get(closeBuf, oldIdx)
    closeHead := (closeHead + 1) % (p + 1)

    prevVal := current

    // Signal = |close - close[period]|
    float signal = not na(oldClose) and closeCount > p ? math.abs(current - oldClose) : 0.0

    // ER = signal / noise (0 when noise is 0)
    float result = noiseSum != 0.0 ? signal / noiseSum : 0.0
    math.max(0.0, math.min(1.0, result))

// ---------- Main loop ----------

// Inputs
i_source = input.source(close, "Source")
i_period = input.int(10, "Period", minval=1, maxval=500)

// Calculation
er_value = er(i_source, i_period)

// Plot
plot(er_value, "ER", color.new(color.yellow, 0), 2)
hline(0.5, "Midline", color=color.gray, linestyle=hline.style_dotted)