Market Facilitation Index: Reading Price Range Changes Against Volume
Summary
The Market Facilitation Index (MFI), attributed to Bill Williams, measures the bar's high-low range per unit of volume. The document explains how to compare both MFI and volume with the prior bar to classify market conditions. When both rise, the reading is called Green and is interpreted as directional movement accompanied by broader participation. When both fall, Fade suggests reduced activity, though a new trend may still follow.
A rising MFI with falling volume is labeled Fake: price moves farther per volume unit, but participation has declined, which the explanation treats as a possible false move. Falling MFI with rising volume is Squat, indicating activity without much price progress; a subsequent breakout may signal continuation or reversal. The document also includes indicator code that plots the four categories. These labels are interpretive heuristics, not tested trading signals here. No markets, timeframes, threshold rules, or performance evidence are supplied, and the description does not establish that the volume patterns reliably predict direction.
Key ideas
- MFI is calculated as the bar's high-low range divided by volume.
- Green describes a rise in both MFI and volume, interpreted as directional movement with increased participation.
- Fade describes declines in both measures and may occur as interest wanes, though a new trend can still emerge.
- Fake and Squat distinguish price movement on lower volume from heavy volume with reduced price progress.
- The document offers interpretations and plotting code but no evidence that these categories produce profitable signals.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.