Money Flow Index - MFI

Dictionary Says

Definition of 'Money Flow Index - MFI'

A momentum indicator that is used to determine the conviction in a current trend by analyzing the price and volume of a given security. The MFI is used as a measure of the strength of money going in and out of a security and can be used to predict a trend reversal. The MFI is range-bound between 0 and 100 and is interpreted in a similar fashion as the RSI.
 
Money Flow Index (MFI)
 

The money flow index is calculated by using the following formula:

Typical Price = (High + Low + Close) / 3
Money Flow = Typical price * Volume
Money Ratio = Positive Money Flow/Negative Money Flow

Note: Positive money values are created when the typical price is greater than the previous typical price value. The sum of positive money over the number of periods used to create the indicator is used to create the positive money flow - the values used in the money ratio. The opposite is true for the negative money flow values.

Money Flow Index = 100 - (100/ (1 + Money Ratio))
Investopedia Says

Investopedia explains 'Money Flow Index - MFI'

The money flow index is similar to the relative strength index (RSI). The fundamental difference is that the MFI also accounts for volume, whereas the RSI only incorporates price. Many traders watch for opportunities that arise when the MFI moves in the opposite direction as the price. This divergence can often be a leading indicator of a change in the current trend.

Sign Up For Chart Advisor!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Money Flow

    Calculated by ...
  2. Net Volume

    A term in ...
  3. Relative Strength Index - RSI

    A technical ...
  4. Risk

    The chance that ...
  5. Universe Of Securities

    A set of ...
  6. Arithmetic Mean

    A mathematical ...
  7. Fundamental Analysis

    A method of ...
  8. Moving Average - MA

    An indicator ...
  9. Moving Average Chart

    A tool used by ...
  10. Dilution

    A reduction in ...

Articles Of Interest

  1. The Basics Of Money Flow

    Learn how this indicator uses both price and volume to record a more complete picture of price action.
  2. Tips For Controlling Investment Losses

    A profit/loss plan helps investors recognize mistakes and invest logically, rather than emotionally.
  3. Triple Screen Trading System - Part 4

    How can a trader use the Elder-Ray oscillator as the second screen of this system? Find out here.
  4. Triple Screen Trading System - Part 3

    Learn about market wave, the second screen in this three-part system.
  5. Triple Screen Trading System - Part 2

    Market tide is the basis for making trading decisions in this three-part system.
  6. Triple Screen Trading System - Part 1

    Learn to take advantage of both trend-following and oscillator techniques to analyze your trading decisions.
  7. Triangles: A Short Study In Continuation Patterns

    Learn how to read these formations of horizontal trading patterns.
  8. Momentum Trading With Discipline

    This type of strategy demands controlled decision-making, requiring a continual refinement of entry and exit techniques.
  9. Trade On Support For The Best Exit Strategy

    Find your sound exit strategy based on support and resistance levels, while understanding the psychology behind them.
  10. Introduction To The Arms Index

    Developed in 1967 by Richard Arms, this volume-based breadth indicator can be applied over various time periods.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center