Market Facilitation Index Threshold Signals from Price Range and Volume

Summary

The strategy calculates the Market Facilitation Index as the bar’s high-low range divided by volume and scaled by 10,000. It uses two thresholds to assign directional states: values above the buy zone indicate long exposure, while values below the sell zone indicate short exposure. A setting can reverse those directions, and the script colors bars according to the resulting state.

The document explains MFI as a way to assess how efficiently price is moving relative to volume, potentially distinguishing active movement from a developing range. It supplies example thresholds and a short BTC/USDT futures test window, but gives no reported results. Its own caveats include lag, event-driven false signals, inability to gauge trend strength, and absence of stop-loss controls. Thresholds may depend on the instrument and volume scale, so the stated formula and sample settings should be validated before use; suggested additions include trend confirmation, stop rules, and position sizing.

Key ideas

• The index relates each bar’s price range to its volume, scaled by 10,000.
• Values relative to buy and sell thresholds determine long or short states.
• A reverse option swaps the directions, and bar colors visualize the state.
• The document provides sample settings and a test period but no performance evidence.
• The approach has no built-in stop loss and may lag or misread market conditions.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.