Description

• MFI measures the money flowing into and outside the security
• It is a volume weighted version of a strength index study, helps to know weakness and reversal of price
• It fluctuates between 0 to 100 levels

Interpretation

• MFI falling below 80 from above gives a sell signal
• MFI rising above 20 from below gives a buy signal
• Divergence between MFI and price gives good reversal signals to take decisions
• Rising MFI value indicates money flowing in security and falling value indicates money flowing out of the security

Default Parameters Used/Inputs

• High Line
• Low Line
• Close Line
• Qty Line
• Bars

Returns/Output

MFI values of stock for the specified period

Formula

MFI = 100 – [ 100/(1+MoneyRatio)]
Money Ratio = SUM(PositiveMoneyFlow) / SUM(NegativeMoneyFlow)
where,
Money Flow = Typical Price * volume
PositiveMoneyFlow = PositiveMoneyFlow-1 + Money Flow
NegativeMoneyFlow = NegativeMoneyFlow-1 + Money Flow