Money Flow Index Calculation from Typical Price and Volume

Summary

This technical note introduces the Money Flow Index (MFI) and outlines its calculation from high, low, close, and volume data over a chosen lookback period. It first computes typical price as the average of the day's high, low, and close. Volume-weighted flow is then assigned to positive or negative flow according to whether typical price rose or fell from the prior period. Summed positive and negative flows form a ratio that is transformed into an oscillator bounded from zero to one hundred.

The document gives pseudocode for the calculation and names configurable periods and thresholds, but it does not explain threshold interpretation, trading rules, or how the indicator performed in tests. Its indicator description is repeated several times, while a linked reference is cited for further meaning. As presented, it is a compact formula reference rather than a complete strategy; users would need to decide how to handle unchanged typical prices, zero negative flow, and signal validation.

Key ideas

• The MFI uses typical price and volume to estimate positive and negative money flow.
• It classifies flow according to whether typical price rises or falls from the previous period.
• The ratio of summed positive to negative flow is transformed into a zero-to-one-hundred oscillator.
• The calculation depends on a lookback period, while the note does not specify operational trading thresholds.
• No tests or performance evidence are reported.

Tags

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