How this indicator works Oversold levels typically occur below 20 and overbought levels typically occur above


The similarities between Chaikin money flow and the money flow index end with the idea that they are both commonly used by active traders .

At this time, it may be best to avoid entering trades in the same direction as a current price move. The appearance of several brown bars in a row may also indicate that the price is about to change direction. The chart below shows the brown bar showing a potential market reversal. Market has been moving lower before a brown bar appears signalling a potential reversal. Fake blue bar — price moves are growing and volume is down The appearance of a blue fake bar indicates that there is a disconnect between price moves and the volume of trade.

It suggests that strong moves could be the result of one-off speculators having the power to push around illiquid markets. Any price moves are therefore unlikely to last long. When a blue fake bar appears, strong moves may be triggered by speculation only and so may not last long. It might be best to avoid entering new trades now.

Experienced traders tend not to enter the market during this phase, which can be a time when new traders get sucked into the market and experience losses. The chart below shows what the MFI looks like when the blue bars are on the chart: The market is undecided about direction as the blue bars form.

Squat pink bar indicates price moves are shrinking, but volume is up The appearance of a pink squat bar suggests that traders are very enthusiastic about entering the market, but it is a battle between bulls and bears, meaning the price does not yet have a clear direction.

As soon as either the buyers or sellers win this fight, prices can experience a sudden, powerful move, and traders have the potential to make quick profits from this. However, the indicator will not determine the direction for you. The chart below highlights the MFI and shows how the market is in a battle between buyers and sellers Pink bar indicating a battle between buyers and sellers.

Suitable for all time frames The MFI indicator works well on all time frames, from 5-minute to daily and weekly charts. Because it actually measures market cycles, the MFI can be used in all market conditions. Specifically there are two types of divergences, bearish and bullish.

Failure Swings Failure swings are another occurrence which can lead to a price reversal. One thing to keep in mind about failure swings is that they are completely independent of price and rely solely on MFI.

MFI bounces back above Of course, MFI should not be used alone as the sole source for a traders signals or setups. MFI can be combined with additional indicators or chart pattern analysis to increase its effectiveness. To make changes to your Indicator you will need to access the Formatting Window. You can access the Formatting Window by either clicking on the Blue "Format" button in the Chart Header next to the Indicator name, or by right clicking on the Indicator in the chart itself and selecting "Format".

Can also select the MFI Line's color, line thickness and visual style. Precision Sets the number of decimal places to be left on the indicator's value before rounding up. The higher this number, the more decimal points will be on the indicator's value.

Arguments in Header Toggles the visibility of the indicator's name and settings in the upper left hand corner of the chart.


BREAKING DOWN 'Money Flow Index - MFI' 

The Money Flow Index (MFI) is an oscillator that uses both price and volume to measure buying and selling pressure. Created by Gene Quong and Avrum Soudack, MFI is also known as volume-weighted RSI.

What is the 'Money Flow Index - MFI' The Money Flow Index (MFI) is a technical oscillator used for identifying overbought or oversold conditions for an individual security or an ETF or index. See how to use the money flow index to actively trade the this post we provide 3 detailed methods you can use to with clear entry, exit and price targets. Learn both short and long strategies. 

More Info

MetaTrader 5 Help

The Money Flow Index (MFI) is a momentum indicator that measures the flow of money into and out of a security over a specified period of time. It is related to the Relative Strength Index (RSI) but incorporates volume, whereas the RSI only considers price. The Money Flow Index indicator (MFI) is a tool used in technical analysis for measuring buying and selling pressure. This is done through analyzing both price and volume. The MFI's calculation generates a value that is then plotted as a line that moves within a range of , making it an oscillator.

Money Flow Index (MFI) is the technical indicator, which indicates the rate at which money is invested into a security and then withdrawn from it. Construction and interpretation of the indicator is similar to Relative Strength Index with the only difference that volume is important to MFI. Free Indicators, Trading Systems & Expert Advisors for MetaTrader 4 & 5.

More Info
© 2018