Money Flow Index (MFI)

What is the Money Flow Index (MFI)?

The Money Flow Index (MFI) is an oscillator that combines typical price and volume on a 0–100 scale, which is why it is also called a volume-weighted RSI. It classifies each period by its typical-price change, weights it by typical price × volume and measures the positive bucket’s share of the classified total. Readings above 80 and below 20 are its usual reference levels.

Gene Quong and Avrum Soudack published it as “Volume-weighted RSI: money flow” in 1989.

How is the Money Flow Index calculated?

Typical price = (high + low + close) / 3. Raw flow = typical price × volume.

When typical price exceeds its prior value, add raw flow to the positive bucket P. When it is lower, add the nonnegative raw amount to the negative bucket N. Equal typical prices contribute to neither bucket in this example.

Use the latest 14 time bars. Include the preceding bar’s typical price to determine the first bar’s direction.

How MFI converts money flow to a 0–100 reading

For nonnegative raw amounts and P + N > 0, MFI = 100 × P / (P + N).

If P is positive and N is zero, the result is 100. If P is zero and N is positive, the result is zero. A value of 80 means P is 80% of the combined classified amount.

MFI vs RSI

The weight uses typical price, rather than the magnitude of its change. Wilder RSI uses smoothed positive and negative close changes, so the two indicators share a ratio transformation while measuring different inputs.

Money Flow Index divergence example

At the chart’s $48 close, positive raw flow is approximately $449.50M and negative raw flow is $79.32M, giving MFI 85.

At the later $52 close, positive raw flow is approximately $670.70M and negative raw flow is $211.80M, giving MFI 76. Price rises while the positive bucket’s share falls.

Both buckets grow in this example. The lower MFI reflects their changed proportion.

How traders use the Money Flow Index

Choose a level crossing, time above or below a threshold, or a comparison between selected price swings. Pair it with the price event that activates the trade, then define entry, invalidation, size and exit.

Window turnover matters: each new bar enters and the oldest bar leaves. An up-typical-price bar can accompany a lower MFI when the outgoing contribution changes the bucket balance.

Keep the instrument, session, interval and volume field consistent. Use Volume Profile to add volume-by-price context and Support and Resistance to define the chart levels in the plan.

MFI reads dollar volume in the stock, and Options Flow reads it in the options: see whether premium confirms the divergence, then price the trade at your target and expiration in the Options Profit Calculator.

Limitations of the Money Flow Index

• A reading above 80 or below 20 measures the bucket balance. When a strong trend keeps the flow one-sided, MFI holds beyond the level while price keeps moving, so let a price event trigger the fade.
• Lookback, interval, session, volume field, equal-typical-price handling and the first comparison all set the value, so match them before you compare two platforms.
• Turnover moves MFI too: when a large positive contribution leaves the lookback and the new up bar adds less, MFI falls on an up bar. Check what dropped out before you read the change.
• Check the size of the move behind a jump in MFI. Each classified period counts fully positive or fully negative by direction alone, so a heavy-volume bar with a tiny rise in typical price adds its whole raw flow to P.
• The 85-to-76 divergence is the bearish setup, and a price break is the trigger. When price keeps rising after MFI makes the lower high, hold the order until that break.

Bottom line

The Money Flow Index shows what share of recent price-and-volume activity came in periods of rising typical price. Use a fixed lookback and a consistent volume series, treat the 80 and 20 levels and divergences as conditions, and let a separate price event trigger the trade.