Money flow index
Mean reversionIntermediate
The money flow index is a 0 to 100 oscillator that weights price changes by volume. It is built like RSI, but each day's move is multiplied by typical price times volume before the average is taken. Traders look for dips under 20 or spikes over 80, and for divergences where price and money flow disagree. Volume is the part RSI does not see.
Not investment advice. Nothing here is a recommendation to buy or sell anything. Backtests and historical studies are not guarantees, and a rule that worked in one sample can fail in the next. Trading can lose money. Links are for education, not endorsements. Do your own research.
- Rules
- The usual length is 14. Money flow is typical price times volume, split into positive and negative days. MFI is 100 minus 100 divided by one plus the positive-to-negative ratio. Fade a cross back above 20 only when a higher-timeframe trend is not down, and exit near 50 or at a prior swing. A divergence needs a written definition, such as a lower price low with a higher MFI low.
- Where AI fits
- AI can test whether adding volume changes results versus RSI on the same markets, which is the only reason to run both. It can drop sessions with missing volume instead of treating them as zero. Thresholds should be evaluated with a cost assumption a retail order would actually pay.
- Markets
- Stocks and futures with trustworthy volume. FX spot volume from one broker is a poor input.
- Timeframes
- Daily. Intraday MFI inherits every bad volume print.
- Risks
- Volume spikes on news, expirations, and index rebalances dominate the window. MFI can stay overbought in a bull market. It will often agree with RSI, so it is not independent confirmation. Bad vendor volume makes the series fiction.