The Money Flow Index is a running indicator that measure trend strength and warns of likely reversal points.
- Calculate the typical price for each period, ie (period.high+period.low+period.close)/3
- Calculate Money Flow for each period, t [p] * volume
- Decide on time frame over which to calculate the index. This should be based on the cycle you are trading
- Calculate NegMoneyFlow: E (t[p] > 0) within the time frame
- Calculate PosMoneyFlow: E (t[p] < 0) within the time frame
- Calculate MoneyRation = +ve flow / -ve flow
- MFI = 100 - 100 / (1 + MoneyRatio)