Money Flow Index (MFI)
factor.formula
Typical price TP:
The Typical Price (TP) is the arithmetic mean of the highest, lowest and closing prices of the day and is used to represent the average price level of that trading day.
Money Flow MF:
Money Flow (MF) is the product of the Typical Price (TP) and the Volume (VOL), representing the total amount of money flowing into or out of the asset on that trading day. When TP rises, MF is positive, and vice versa. Here, the Volume is multiplied by the Typical Price, which represents the amount of money at the "average" transaction price on that trading day.
Positive money flow PF(N):
The sum of positive money flows in N days (PF(N)) is the cumulative value of money flows (MF) corresponding to the typical price (TP) of the day being higher than the typical price of the previous day in the past N trading days. It represents the total amount of funds flowing into the asset during the price increase, which can be understood as the accumulation of buyer power.
Negative money flow NF(N):
The sum of negative money flows in N days (NF(N)) is the cumulative value of the money flow (MF) corresponding to the typical price (TP) of the day in the past N trading days when it is less than or equal to the typical price of the previous day. It represents the total amount of funds that flow out of the asset during the period of price decline or no change, which can be understood as the accumulation of seller power.
Currency Ratio MR(N):
The money ratio (MR(N)) is the ratio of the sum of positive money flows (PF(N)) to the sum of negative money flows (NF(N)). It is used to measure the relative strength of buyer and seller power in a specific period. When the MR(N) value is greater than 1, it means that the buyer power is greater than the seller power, and vice versa, the seller power is greater than the buyer power.
Money Flow Index MFI:
The Money Flow Index (MFI(N)) is a standardized indicator calculated based on the Money Ratio (MR(N)) and has a value range of 0 to 100. When the MFI value is close to 100, it means that the market is overbought, and when the MFI value is close to 0, it means that the market is oversold.
in:
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High Price refers to the highest transaction price reached during a specific trading day.
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Low Price refers to the lowest transaction price reached during a specific trading day.
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Closing Price refers to the last transaction price at the end of a specific trading day.
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Volume refers to the total trading volume of the asset on a specific trading day.
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Typical Price is the average of the highest, lowest and closing prices and is used to represent the price level of that trading day.
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Money Flow is the product of typical price and trading volume, which indicates the amount of funds flowing on that trading day.
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The sum of positive money flows over N days is the sum of the funds that flowed into the asset when the typical price rose over the past N trading days. The sum is represented by the sum symbol $\sum$.
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The sum of negative money flows over N days is the total amount of money that has flowed out of the asset when the typical price fell or remained flat over the past N trading days. The sum is represented by the sum symbol $\sum$.
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The Money Ratio is the ratio of the sum of positive money flows to the sum of negative money flows, and is used to measure the relative strength of capital inflows and outflows.
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Money Flow Index over N days is a standardized indicator calculated based on currency ratios. It is used to assess the overbought and oversold state of the market, with a value range of 0-100.
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Time Period, usually defaults to 14 and can be adjusted according to different markets and strategies. It represents the time span used to calculate the MFI indicator.
factor.explanation
The Money Flow Index (MFI) evaluates the overbought and oversold conditions of the market by taking into account both price and volume. When the MFI value is above 80, it is generally considered to be in the overbought zone, at which point the market may face the risk of a price correction, and when the MFI value breaks below 80, it may indicate a short-term selling opportunity. Conversely, when the MFI value is below 20, it is generally considered to be in the oversold zone, at which point the market may face the opportunity for a price rebound, and when the MFI value breaks above 20, it may indicate a short-term buying opportunity. It should be noted that the overbought and oversold thresholds (80 and 20) of the MFI indicator are not fixed and can be adjusted based on specific market conditions and trading strategies. In addition, the MFI indicator should be used in conjunction with other technical analysis tools to improve the accuracy of trading decisions.