Last updated: 8 October 2026. Every screenshot below was recorded on 8 October 2026 on an IQ Option Practice account registered in Brazil, on EUR/USD 5-minute candles; the Chart analysis picture in Step 1 was recorded on 5 October 2026. We placed no real-money trade. The settings come from the platform’s dialog and the calculation from the published source code of the platform’s built-in indicators (Quadcode’s script library). The tested box shows what the zero-line signal did on EUR/USD candles recorded between 29 September and 5 October 2026; it says nothing about what will happen next.
The Disparity Index shows how far the close is from a moving average of the close, as a percentage of that average. With the defaults, 14 candles and a simple average, it is 100 × (close − SMA(14)) ÷ SMA(14). On IQ Option it opens in its own panel under the price chart as one line around a zero line: above zero the close is above its average, below zero it is below. A cross of the zero line is read as the signal and extreme values as a coming correction. On 5-minute EUR/USD candles the line stayed between −0.35% and +0.21%, and it crossed zero 163 times in 1,308 candles, about every 8 candles.
Quick answer
- What it plots: one line in a panel under the price chart, around a zero line.
- Formula: Disparity Index = 100 × (close − moving average) ÷ moving average. The default is a simple average over 14 candles.
- Settings on the platform: Period 14, Source (close) and Moving Average (SMA).
- Reading: above zero the price is above its average (upward momentum), below zero below it; a cross of zero is the signal, and the extremes are its sign of a correction.
- Where: the Trend list of the Chart analysis panel; search for Disparity.
- Tested: the zero cross gave 162 signals on 5-minute candles; 1-candle trades won 44.9% of the decided trades, 3-candle trades 55.6%; on 1-minute candles 210 signals and 51.9%. Break-even is 54.1% at an 85% payout, and a few days of one pair prove nothing.
How do you add the Disparity Index on IQ Option?
Set the chart
Choose the asset, the chart type and the candle size first: the indicator is calculated from the candles on the chart. The examples in this guide use 5-minute candles on EUR/USD. These steps use the web traderoom on a Practice balance, and the numbers in each screenshot match the numbers in the text. If you do not have an account yet, see how to register.
Step 1: Open Chart analysis
Click the indicators button (1), the wave icon in the chart toolbar at the bottom left of the chart. The Chart analysis panel opens with the tabs Indicators, Templates, Widgets and Scripts. Stay on Indicators.
Step 2: Find Disparity Index
Type “Disparity” in the Search for indicators box (1), or open the Trend list, and click Disparity Index (2).
Step 3: Check the settings
The dialog has the tabs Basic settings (1), Colors and display and Script. The Period (2) opens at 14, the number of candles in the moving average. The Source (3) opens at close, the price whose distance from the average is measured. The Moving Average (4) opens at SMA, the kind of moving average.
Step 4: Check the colours and click Apply
Open the Colors and display tab (1). The tab has two rows: Main line, red by default, and Base line, the grey zero line, which has a checkbox; each has a colour box and a line-style box. Click Apply (3).
Step 5: Read the panel
The panel under the price chart is titled Disparity Index (14,close,SMA) (1). The red line (2) moves around a grey 0 line, and the scale at the right edge is in percent, for example 0.1 and 0.
How is the Disparity Index calculated?
The formula is Disparity Index = 100 × (close − average) ÷ average, which is the usual (current price − n-period moving average value) ÷ n-period moving average value × 100. In the Quadcode source the average is taken from the Average setting, a simple moving average by default, over the Period of 14 candles, and the source is the close. The result is a percentage: 0.1 means that the close is 0.1% above its average, which for EUR/USD at 1.13 is about 11 pips.
| Part | Default | What it does |
|---|---|---|
| Period | 14 | Number of candles in the moving average |
| Source | close | The price used |
| Moving Average | SMA | The kind of moving average |
The line is above zero exactly when the close is above its moving average, so a cross of the zero line is the close crossing the average. The Pretty Good Oscillator uses the same average and the same crossing, so its zero crosses come on the very same candles; see the Pretty Good Oscillator guide, which scales the distance by the average true range instead of the average.
How do you read the Disparity Index?
It is a momentum indicator that shows how strong the trend is and how likely a reversal is. Below zero, growing selling pressure is expected; at zero the price equals its average; above zero the momentum is upward. The main signal is the cross of the zero line, which is compared to the Rate of Change and read as a predicted change of trend. Extreme values mean the price is oversold or overbought and a change is imminent: the line is not to be followed any more there. In a strong uptrend the line stays above zero, and in a strong downtrend below it. Divergences between the line and the price are read like those of other oscillators. Its limits are false signals, weak results when used alone, and range-bound markets; medium to long-term charts (H1, H4, D1) are the usual time frames.
What did it look like on 5-minute candles?
We replayed the library script on EUR/USD 5-minute candles recorded from the Practice traderoom: 1,093 candles from 29 September 2026 (01:55 UTC) to 2 October (20:55 UTC) and 241 from 4 October (21:00 UTC) to 5 October (17:00 UTC). With the default period the line has a value from the 14th candle of each stretch, 1,308 values in all.
- Range: from −0.351% to +0.213%; the lowest 5% of the values were below about −0.09% in the first stretch and below −0.14% in the second, and the highest 5% above +0.07% and +0.09%.
- Side of zero: above zero on 567 candles (43%).
- Zero crossings: 163, about one every 8 candles. They often come in pairs a few candles apart.
Two stills of the platform, window A (the Step 5 picture) and window B (not pictured), agree with the replay. In window A, 29 September from 06:43 to 12:38 on the platform clock, the line peaks at +0.080% at 08:00 and +0.079% at 09:05 (under the 0.1 mark), falls through 0 at 09:25, stays mostly under it until 10:50, hovers around 0 until 11:45 and ends near −0.03%. In window B, from 12:03 to 17:52, it falls to its low of −0.119% at 14:00, rises through 0 at 15:05 to a high of +0.147% at 15:15, and falls back through 0 at 16:35 before ending above 0 at 17:40. The replay of the library script gives the same highs and lows at the same times, which shows that the panel’s scale is in percent. (The platform draws the value of a candle at the time the candle closes: the candle that opened at 08:00 sits at the 08:05 mark.)
The zero-cross signal, tested
We wrote the signal as an exact rule on closed candles: Higher on the candle where the Disparity Index rises above zero and Lower on the candle where it falls below zero, with the option opened at the close of that candle. No expiry is given, so the box shows five minutes and fifteen minutes on 5-minute candles and five minutes on 1-minute candles. Extremes, divergences and the usual time frames of H1 and above are not tested here.
Tested on IQ Option: the Disparity Index zero cross, EUR/USD candles of 29 September to 5 October 2026
| Asset and candles | EUR/USD binary (regular, not OTC): 1,334 five-minute candles (2026-09-29 01:55 to 2026-10-02 20:55 UTC and 2026-10-04 21:00 to 2026-10-05 17:00 UTC); 1,505 one-minute candles (2026-10-02 18:23 to 2026-10-02 20:59 UTC and 2026-10-04 21:01 to 2026-10-05 19:28 UTC). The candles were recorded from IQ Option’s Practice traderoom. The replay places no orders; it only scores the rule on those closed candles, at an 85% payout. |
|---|---|
| Rule tested | The zero-line signal on closed candles: Higher on the candle where the Disparity Index rises above zero, Lower on the candle where it falls below zero; the option opens at the close of that candle. Defaults 14, close and SMA; no expiry is given, so the box shows 5 and 15 minutes on 5-minute candles and 5 minutes on 1-minute candles. |
| Signals | Zero cross, period 14, 5-minute, 1 candle: 162 signals (81 Higher, 81 Lower) Zero cross, period 14, 5-minute, 3 candles: 162 signals (81 Higher, 81 Lower) Zero cross, period 14, 1-minute, 5 candles: 210 signals (104 Higher, 106 Lower) |
| Outcomes | Zero cross, period 14, 5-minute, 1 candle: 71 won, 87 lost, 4 tied; 44.9% of the 158 decided trades won; net −$0.17 per $1 staked at 85% (−$0.14 at 91%) Zero cross, period 14, 5-minute, 3 candles: 90 won, 72 lost, 0 tied; 55.6% of the 162 decided trades won; net +$0.03 per $1 staked at 85% (+$0.06 at 91%) Zero cross, period 14, 1-minute, 5 candles: 107 won, 99 lost, 4 tied; 51.9% of the 206 decided trades won; net −$0.04 per $1 staked at 85% (−$0.01 at 91%) |
| Break-even | At an 85% payout a trade needs to win more than 54.1% of its decided trades to break even (1 ÷ 1.85); at 91%, more than 52.4% (1 ÷ 1.91). |
A replay is only a look back at candles recorded on the dates above: it placed no real orders, covers about four and a half days of one pair, and counts overlapping trades as if they were independent. A short test proves nothing about the future, and no profit and no win rate is promised here. IQ Option’s own blog on backtesting says that most strategies need dozens, and often hundreds, of trades before a result means anything.
The rule gave 162 signals on 5-minute candles, 81 Higher and 81 Lower. With a trade of one candle (5 minutes) 71 won and 87 lost (44.9%, with a 95% interval of 37% to 53%); with three candles (15 minutes) 90 won and 72 lost (55.6%, interval 48% to 63%). On 1-minute candles with a 5-minute trade it gave 210 signals and 107 won against 99 (51.9%). The 15-minute result is level with the break-even rate of 54.1% and the 5-minute result is below it; the two expiries disagree by ten points on the same signals, which is what a few days of one pair can do.
Pros and Cons of the Disparity Index
| Pros | Cons |
|---|---|
| Easy to read: a percentage above or below the average, with a zero line. | It crosses zero whenever the close crosses its average: 163 times in about four and a half days of 5-minute candles. |
| The same formula works on any asset, since it is a percentage. | It may give false signals, is not reliable alone and may not work in a range. |
| Two settings, the period and the kind of average, can be changed to smooth the line. | The usual time frames are H1, H4 and D1; we looked at 5 and 1 minutes. |
Common mistakes
- Entering on every zero cross. On 5-minute EUR/USD it crossed about every 8 candles.
- Calling an extreme a reversal. The line stays above zero in a strong uptrend; a high value can last.
- Reading the values like pips. The values are percentages of the price: 0.1 is 0.1%.
- Treating the Pretty Good Oscillator as a second confirmation. Its zero line is crossed on the same candles as this one.
Related guides
- Pretty Good Oscillator and Rate of Change
- Moving Average Deviation and simple moving average
- Classic and hidden divergences and leading and lagging indicators
- All indicator guides and all strategy guides
Frequently Asked Questions
Q: What is the Disparity Index?
A: The distance of the close from a moving average of the close, as a percentage of the average. It is positive when the close is above the average and negative when it is below.
Q: What settings does the Disparity Index have on IQ Option?
A: Period 14, Source set to close and Moving Average set to SMA. The Colors and display tab has a colour and a line style for the line and for the zero line.
Q: What does a cross of the zero line mean?
A: That the close has crossed its moving average. It is read as a predicted change in the trend. The results of the rule are in the tested box.
Q: What is the difference from the Moving Average Deviation?
A: The Moving Average Deviation indicator plots the price minus its moving average as bars, in price units. The Disparity Index plots that difference as a percentage of the average, as a line. See the Moving Average Deviation guide for the bars.
Q: Which time frames are recommended?
A: Medium to long-term charts: H1, H4 and D1. We tested 5-minute and 1-minute candles, because those were the recorded ones.
Q: Can I use the Disparity Index on binary options?
A: The platform draws it on any chart. Whether a rule works is something to test on the Practice balance with the expiry you plan to use.
