Money Flow Indicator
factor.formula
Typical price TP:
Money Flow MF:
Positive money flow PF(N):
Negative money flow NF(N):
Currency Ratio MR(N):
Money Flow Index MFI:
in:
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The highest price of the current cycle reflects the upward volatility limit of the market within that cycle.
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The lowest price in the current cycle reflects the downward volatility limit of the market within this cycle.
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The closing price of the current period represents the final price at the end of the period.
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The volume of the current period, which indicates the number of shares or contracts traded during that period, reflects market participation.
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The Typical Price, which is the average of the High, Low, and Close prices, is an estimate of the average trading price during that period.
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Money flow is the product of typical price and trading volume, representing the scale of capital flow during the period.
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The sum of positive money flows within N days, that is, the sum of money flows in all periods within N periods when typical prices rise, reflects the intensity of capital inflows during the rise.
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The sum of negative money flows within N days, that is, the sum of money flows in all periods within N periods when the typical price falls or remains unchanged, reflects the intensity of capital outflows during the decline.
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The currency ratio is the ratio of the sum of positive money flows to the sum of negative money flows, reflecting the relative strength of long and short funds.
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The calculation time period determines the number of periods to look back to calculate the money flow. 20 is usually used as the default value, but it can be adjusted according to different trading frequencies and preferences.
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Indicates the current cycle.
factor.explanation
The Money Flow Index (MFI) uses typical prices and volumes to measure the strength of capital inflows and outflows in the market. By combining price and volume information, the indicator is more sensitive to identifying overbought and oversold market conditions. The MFI indicator value fluctuates between 0 and 100, with values above 80 generally considered overbought and values below 20 considered oversold. When the MFI is above 80 and then falls below 80, it may indicate a short-term selling opportunity; when the MFI is below 20 and then breaks through 20, it may indicate a short-term buying opportunity. It should be noted that the MFI indicator should be used in conjunction with other technical indicators to increase the reliability of trading signals. In actual applications, the parameters of the MFI indicator (such as the time period N) may need to be optimized for different markets and time frames.