Money Flow Index (MFI)
The Money Flow Index (MFI) is a technical indicator used to measure the strength of money flowing in and out of a security. It is based on the price and volume of a security, and is used to identify potential buying and selling opportunities. The MFI is calculated by taking the ratio of the positive money flow to the negative money flow over a given period of time. The higher the MFI, the more money is flowing into the security, and the lower the MFI, the more money is flowing out of the security.
History of the Money Flow Index
The Money Flow Index was developed by Gene Quong and Avrum Soudack in the late 1980s. It is based on the concept of the Relative Strength Index (RSI), which was developed by J. Welles Wilder in 1978. The MFI is similar to the RSI in that it is a momentum indicator, but it takes into account both price and volume. The MFI is used to identify potential buying and selling opportunities, as well as to identify overbought and oversold conditions.
Comparison Table
| Indicator | Calculation | Interpretation |
|---|---|---|
| Money Flow Index (MFI) | Ratio of positive money flow to negative money flow | Identifies potential buying and selling opportunities |
| Relative Strength Index (RSI) | Ratio of average gains to average losses | Identifies overbought and oversold conditions |
Summary
The Money Flow Index (MFI) is a technical indicator used to measure the strength of money flowing in and out of a security. It is based on the price and volume of a security, and is used to identify potential buying and selling opportunities. The MFI is similar to the Relative Strength Index (RSI) in that it is a momentum indicator, but it takes into account both price and volume. For more information about the Money Flow Index, please visit Investopedia, Investing.com, and StockCharts.com.
See Also
- Relative Strength Index (RSI)
- On Balance Volume (OBV)
- Moving Average Convergence Divergence (MACD)
- Average Directional Index (ADX)
- Bollinger Bands
- Stochastic Oscillator
- Commodity Channel Index (CCI)
- Chaikin Money Flow (CMF)
- Williams %R
- Accumulation/Distribution Line (ADL)
