GlossaryMoney Flow Index (MFI)

Money Flow Index (MFI)

The Money Flow Index is an RSI that also weighs volume. Instead of only counting how far the price has risen or fallen, it weights each candle by the money traded in it. On a scale from 0 to 100, it shows whether money flow has recently gone more into rising or into falling candles.

Calculation

$H_t$ , $L_t$ and $C_t$ are the high, low and close of a candle, $V_t$ its volume, $n$ the MFI length.

1. Typical price:

\mathrm{TP}_t = \frac{H_t + L_t + C_t}{3}

2. Money flow of the candle: typical price times volume:

\mathrm{MF}_t = \mathrm{TP}_t \cdot V_t

3. Split by direction. If the typical price is higher than on the previous candle, the money flow counts as positive; if it is lower, as negative. If it stays the same, it counts on neither side:

\mathrm{PMF}_t = \begin{cases} \mathrm{MF}_t & \text{if } \mathrm{TP}_t > \mathrm{TP}_{t-1} \\ 0 & \text{otherwise} \end{cases} \qquad \mathrm{NMF}_t = \begin{cases} \mathrm{MF}_t & \text{if } \mathrm{TP}_t < \mathrm{TP}_{t-1} \\ 0 & \text{otherwise} \end{cases}

4. Ratio over the last $n$ candles and conversion to 0 to 100:

\mathrm{MR}_t = \frac{\sum_{i=0}^{n-1} \mathrm{PMF}_{t-i}}{\sum_{i=0}^{n-1} \mathrm{NMF}_{t-i}}, \qquad \mathrm{MFI}_t = 100 - \frac{100}{1 + \mathrm{MR}_t}

If there was no negative money flow in the window, the MFI stands at 100. Unlike the RSI, the MFI uses no Wilder smoothing but a simple sum over a fixed window: each candle counts in full for exactly $n$ candles and then drops out entirely. The first value appears on candle $n+1$ .

How to read it

The curve is red from 80, green at 20 and below, gray in between. Reference lines are at 20, 50 and 80, and the zones at the top and bottom are shaded.

Overbought and oversold: Above 80, most of the money flowed into rising candles, below 20 into falling ones. The thresholds are further out than for the RSI because volume makes the MFI swing more strongly.
Divergences: They are the most important reading. If the price rises to a new high while the MFI makes a lower high, less volume is carrying the rise.
Comparison with the RSI: If the RSI and MFI diverge, volume is the reason. An RSI high with a weak MFI suggests that the gains came on thin trading.

Settings

Setting	Default	Effect
MFI length	14	Number of candles $n$ in the sum window (2–100).

Limitations

No volume, no MFI. For series without volume, such as some indices, the pane stays empty.
Because a candle drops out of the window entirely after $n$ candles, the MFI can jump even though little is happening.
A single candle with extreme volume can dominate the ratio for $n$ candles.