What is the 'Money Flow Index  MFI'
The money flow index (MFI) is a momentum indicator that measures the inflow and outflow of money into a security over a specific period of time. The MFI uses a stock's price and volume to measure trading pressure. Because the MFI adds trading volume to the relative strength index (RSI), it's sometimes referred to as volumeweighted RSI.
BREAKING DOWN 'Money Flow Index  MFI'
The value of the MFI is always between 0 and 100, and calculating it requires several steps. The developers of the MFI, Gene Quong and Avrum Soudack, suggest using a 14day period for calculations. Step one is to calculate the typical price. Second, the raw money flow is calculated. The third step is to calculate the money flow ratio using the positive and negative money flows for the previous 14 days. Finally, using the money flow ratio, the MFI is calculated. Formulas for each of these items are as follows:
Typical price = (high price + low price + closing price) / 3
Raw money flow = typical price x volume
Money flow ratio = (14day Positive Money Flow) / (14day Negative Money Flow)
(Positive money flow is calculated by summing up all of the money flow on the days in the period where the typical price is higher than the previous period typical price. This same logic applies for the negative money flow.)
MFI = 100  100 / (1 + money flow ratio)
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. An MFI of over 80 suggests the security is overbought, while a value lower than 20 suggest the security is oversold.
Money Flow Index Calculation Example
While a 14day period is typically used in calculating the MFI, for simplicity's sake, below is a fourday example. Assume a stock's high, low and closing prices for four days are listed along with volume as:
Day one: high = $24.60, low = $24.20, closing = $24.28, volume = 18,000 shares
Day two: high = $24.48, low = $24.24, closing = $24.33, volume = 7,200 shares
Day three: high = $24.56, low = $23.43, closing = $24.44, volume = 12,000 shares
Day four: high = $25.16, low = $24.25, closing = $25.05, volume = 20,000 shares
Using the above formula, the typical prices are:
Day one = $24.36
Day two = $24.35
Day three = $24.14
Day four = $24.82
Raw money flow for each day is:
Day one = $24.36 x 18,000 = 438,487
Day two = $24.35 x 7,200 = 175,323
Day three = $24.56 x 12,000 = 289,736
Day four = $25.16 x 20,000 = 496,400
Money flows are:
Positive money flow = 438,487 + 496,400 = 934,887
Negative money flow = 175,323 + 289,736 = 465,059
Money flow ratio = 934,887 / 465,059 = 2.01
Money flow index = 100  100 / (1 + 2.01) = 100  33.22 = 66.78

Sales To Cash Flow Ratio
The sales to cash flow ratio shows how efficiently a business ... 
Free Cash Flow Yield
An overall return evaluation ratio of a stock, which standardizes ... 
Capital Flows
Capital flows entail the path that money travels through corporations, ... 
Free Cash Flow Per Share
On a per share basis, free cash flow per share is cash available ... 
Operating Cash Flow Ratio
A measure of how well current liabilities are covered by the ... 
Unconventional Cash Flow
An unconventional cash flow is a series of inward and outward ...

Trading
The Basics Of Money Flow
Learn how this indicator uses both price and volume to record a more complete picture of price action. 
Trading
The top technical indicators for options trading
Option traders use a number of technical indicators, including the relative strength index, Bollinger bands, Intraday Momentum Index, and Money Flow Index. 
Investing
Cash Flow From Investing
Cash flow analysis is a critical process for both companies and investors. Find out what you need to know about it. 
Investing
Analyze Cash Flow The Easy Way
Learn the key components of the cash flow statement and how to analyze and interpret changes in cash. Improving free cash flow means a company is in a better position to reward shareholders. ... 
Small Business
How to Calculate Net Present Value (NPV) in Excel
Learn how to calculating the net present value (NPV) of your investment projects using builtin functions from Excel. 
Trading
Essential Strategies For Trading Volume
Looking to trade using volume? Have a look at these essential tips. 
Investing
Cash Flow on Steroids: Why Companies Cheat
Pressure to be the best can sometimes push corporations to cheat. Learn how they do it and how to spot it.

What are the main differences and similarities between the Money Flow Index (MFI) ...
Learn to distinguish between the relative strength index (RSI), a popular momentum oscillator, and the money flow index (MFI), ... Read Answer >> 
What are the best technical indicators to complement the Money Flow?
Understand the most useful technical indicators to use in conjunction with the money flow index when establishing effective ... Read Answer >> 
What are the main differences and similarities between Money Flow and Real Flow?
Learn the meaning of the terms "money flow" and "real flow," and find out how they relate to each other as they are used ... Read Answer >> 
What is the difference between cash flow and fund flow?
See how cash flow and fund flow differ from each other, and why fund flow can be used very differently by accountants and ... Read Answer >> 
Are taxes calculated in operating cash flow?
Learn how taxes are involved with the calculations for a firm's operating cash flow, and the overall significance of operational ... Read Answer >>