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Money Flow Index

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Introduction

The Money Flow Index is a running indicator that measure trend strength and warns of likely reversal points.

Construction

  1. Calculate the typical price for each period, ie (period.high+period.low+period.close)/3
  2. Calculate Money Flow for each period, t [p] * volume
  3. Decide on time frame over which to calculate the index. This should be based on the cycle you are trading
  4. Calculate NegMoneyFlow: E (t[p] > 0) within the time frame
  5. Calculate PosMoneyFlow: E (t[p] < 0) within the time frame
  6. Calculate MoneyRation = +ve flow / -ve flow
  7. MFI = 100 - 100 / (1 + MoneyRatio)

Signals

Strength

Notes

Related Terms

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