What it is
Gene Quong and Avrum Soudack developed the MFI. Because it uses both price and volume, a big move on heavy volume pushes it further than the same move on light volume.
It is often called a volume weighted RSI. Its standard levels are 80 and 20, wider than RSI's 70 and 30, and divergences between MFI and price are one of its most used signals. On forex and CFD charts it uses tick volume.
How it is calculated
Typical price for each candle = (high + low + close) / 3. Raw money flow = typical price x volume. If the typical price is higher than the previous candle's, that money flow counts as positive; if lower, negative. Over 14 candles, money ratio = sum of positive flow / sum of negative flow. MFI = 100 minus 100 / (1 + money ratio).
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| length | 14 | 2 to 200 | How many candles of money flow are added up. Shorter reaches 80 and 20 more often. |
How to read it
How to trade it
- 1
On a 1 hour gold chart at a known support, wait for MFI to drop below 20.
- 2
Entry trigger: MFI crosses back above 20 and the candle closes above the previous candle's high. Enter on that close.
- 3
Stop below the swing low, often 10 to 20 points on gold 1 hour.
- 4
Target the middle of the recent range or 2 times the stop. Exit early if MFI turns back down before reaching 50.
A close below the swing low after the cross cancels the turn. If MFI drops back under 20 within a few candles, the selling has not finished.
On WickSpeak, the MFI writes a plain-English reading on the live candle: where money flow sits from 0 to 100, which way it is moving, how to trade it and what would prove it wrong. In Playbook you can test: crosses above or below a level, is above or below a level, is between two levels, is rising, or is falling.
WickSpeak also has its own version, the WickSpeak Money Flow Index. The line is coloured by strength: faint when the reading is weak, glowing when it is strong, mint above its middle line (50) and pink below it. A cross of the middle line is marked only once the candle has closed, so a marker never vanishes after you have seen it. A gold marker shows a stretched reading, meaning the strongest few percent of its own range or past a fixed level. Divergences between price and the oscillator are drawn on both the chart and the indicator, and a chip shows the same reading on a higher timeframe.
Best markets and timeframes
Most useful where volume is meaningful: index futures, crypto, and gold or US30 CFDs with tick volume, on 15 minute to daily charts.
Common mistakes
- Using RSI's 70 and 30 levels instead of MFI's usual 80 and 20.
- Selling every reading above 80 in a trend backed by rising volume.
- Trading divergence without a price trigger.
Works well with
Questions traders ask
What is the difference between MFI and RSI?
RSI uses only price changes. MFI multiplies each move by volume, so moves on heavy volume count for more. MFI's usual extremes are 80 and 20 rather than 70 and 30.
What is a good MFI setting?
14 is the standard. Shorter settings react faster but reach the extremes more often. Test any change on your own market.
What does MFI above 80 mean?
Buying money flow has been heavy compared with selling. In a range that often comes before a pause; in a strong trend it can stay high.
Does MFI work on forex?
It works with tick volume, which tracks activity. It is more precise on markets with real exchange volume, such as futures and crypto.