What Is Money Flow Index (MFI)?
MFI is a volume-weighted momentum oscillator that measures buying and selling pressure on a scale of 0 to 100.
Quick Answer
MFI is a volume-weighted momentum oscillator that measures buying and selling pressure on a scale of 0 to 100.
What Does MFI Measure?
The Money Flow Index (MFI) is sometimes called "volume-weighted RSI." Developed by Gene Quong and Avrum Soudack, it incorporates both price and volume to gauge the strength of money flowing into or out of an asset. MFI uses typical price multiplied by volume to create a raw money flow, then compares positive money flow to negative money flow over a lookback period. Readings above 80 suggest overbought conditions with heavy buying pressure; readings below 20 suggest oversold conditions. VaultCharts includes MFI as a free subpane indicator on desktop charts.
Money Flow = Typical Price × Volume; MFI = 100 - (100 / (1 + Money Flow Ratio))How to Read MFI
- 1MFI above 80 suggests overbought conditions with strong buying
- 2MFI below 20 suggests oversold conditions with strong selling
- 3Rising MFI confirms uptrends backed by volume
- 4Divergence between MFI and price can signal weakening momentum
How to Use MFI in Trading
MFI Settings
| Setting | Default | Description |
|---|---|---|
| Period | 14 | Number of periods for MFI calculation |
Common Mistakes to Avoid
Use MFI in VaultCharts
VaultCharts includes Money Flow Index with customizable settings. Combine it with our automated pattern detection and trade signals for better analysis.