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Thread: How to use Mfi?

  1. #1
    anujgoyal.1
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    Default How to use Mfi?

    hi,
    I wanna know how to use money flow index. On which time frame chart it is to be set and which setting is perfect for mfi? Any good indicator which should be use with MFI?

  2. #2
    In Profit wing2008's Avatar
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    Money Flow Index (MFI)

    It is a momentum indicator that measures the strength of money flowing in and out of a security or futures. It is related to Relative Strength Index, but MFI accounts for volume.

    Calculation for MFI
    1. Calculate the period's Typical Price ( (High+Low+Close)/3 )
    2. Calculate Money Flow by multiply the period's Typical Price with the Volume. If today's Typical Price is greater than yesterday's Typical Price, it is considered Positive Money. If today's Typical Price is less then it is considered Negative Money
    3. Positive Money Flow calculated by adding the Positive Money over the specified number of periods. Negative Money Flow is the sum of the Negative Money over the specified number of periods
    4. Calculate the Money Ratio by dividing the Positive Money Flow by the Negative Money Flow
    5. MFI is calculated using the Money Ratio and put it to a 0 to 100 scale


    The Interpretation
    MFI can being interpreted as follows:
    1. Look for market tops to occur when overbought level reached whichin above 80. Look for market bottoms to occur when MFI value showed an oversold level below 20.
    2. Look for divergence between indicator and prices. If the price trends higher and MFI trends lower, a bearish divergence occur. If the price trends lower and MFI trends higher, a bullish divergence occur. When a divergence occur, a reversal may be imminent.

  3. #3
    Bullish
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    All volume indicators are irrelevant in forex as this market has not a specific plays like for instance NYSE does and it is impossible to measure volume as each broker has a certains number of active clients and this number differs significantly from broker to broker, hence their volumes will differ...

  4. #4
    Bullish
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    Sorry, I meant "specific place" and not "plays" in the post above.

  5. #5
    Bullish lak's Avatar
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    and you take the botooms to entry and exits

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