Money Flow Index (MFI)

A volume-weighted RSI that measures buying and selling pressure.

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Overview

What is Money Flow Index (MFI)?

The Money Flow Index (MFI) was developed by Gene Quong and Avrum Soudack and is sometimes called the "volume-weighted RSI" because its construction mirrors RSI's logic but incorporates volume into each period's calculation. This makes MFI a more comprehensive measure of money flow — the actual buying and selling pressure — rather than just price momentum.

The indicator starts with Typical Price (High + Low + Close) / 3. When typical price rises from the prior period, the day's Raw Money Flow (Typical Price × Volume) is positive; when it falls, it is negative. The ratio of positive to negative money flow over the lookback period is transformed through the same RSI formula to produce a 0–100 oscillator.

Like RSI, values above 80 are considered overbought and values below 20 oversold — but because volume is included, these signals are considered more reliable than RSI alone. A security with high price but declining MFI suggests that the rally is not supported by increasing participation, which is bearish.

MFI divergence is particularly valued: when price makes new highs but MFI fails to confirm, it suggests distribution is occurring. The reverse signals accumulation before an upside move. This makes MFI a leading indicator capable of anticipating reversals before they appear in price alone.

How It Works in auto-Trading

Automate It

auto-Trading uses MFI as a standalone signal generator and as a confirmation filter. Build strategies that buy oversold MFI readings (< 20) in uptrending assets, or sell overbought readings (> 80) in downtrends. MFI divergence scanning is available across all instruments to find accumulation/distribution setups automatically.

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External Resources

Learn from Trusted Sources

Investopedia — MFI↗

Full guide to the Money Flow Index and its calculation.

TradingView — MFI Scripts↗

MFI indicators and strategies on TradingView.

StockCharts — MFI↗

StockCharts' detailed MFI article with examples.

Strategy Code

Pick a script below, copy it, and use it on your chart.

Pine Script (TradingView)

This is a TradingView Pine Script example for this indicator. Paste it into the TradingView Pine Editor, add it to your chart, and adjust inputs for your market and timeframe.

//@version=6
indicator("Money Flow Index (MFI)", overlay=false)
length = input.int(14, "MFI Length")
mfi    = ta.mfi(hlc3, length)
longSignal  = ta.crossover(mfi, 20)
shortSignal = ta.crossunder(mfi, 80)
plotshape(longSignal,  style=shape.triangleup,   location=location.bottom, color=color.green, size=size.small)
plotshape(shortSignal, style=shape.triangledown, location=location.top,    color=color.red,   size=size.small)
hline(80, "Overbought", color=color.red,   linestyle=hline.style_dashed)
hline(50, "Mid",        color=color.gray,  linestyle=hline.style_dotted)
hline(20, "Oversold",   color=color.green, linestyle=hline.style_dashed)
plot(mfi, "MFI", color=color.new(color.teal, 0))

ThinkScript (thinkorswim)

This is a thinkorswim ThinkScript example for this indicator. Open thinkorswim, create a custom study, paste the script, and apply it to your chart.

input length = 14;
def mfi = MoneyFlowIndex(length = length);
def buySignal = mfi crosses above 20;
def sellSignal = mfi crosses below 80;
AddOrder(OrderType.BUY_AUTO, buySignal, close, 1, Color.GREEN, Color.GREEN, "MFI Buy");
AddOrder(OrderType.SELL_AUTO, sellSignal, close, 1, Color.RED, Color.RED, "MFI Exit");
plot MFI_Line = mfi;
MFI_Line.SetDefaultColor(Color.CYAN);

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