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It is calculated as follows:
1. Define a "Typical Price" (TP) for the specified period:
TP = ( HIGH + LOW + CLOSE ) / 3
2. Calculate "Money Flow" value (MF):
MF = TP x VOLUME
If "Typical Price" is higher than the preceding one then "Money Flow" is positive. If "Typical Price" is lower than the preceding one then "Money Flow" is negative.
3. Calculate "Positive Money Flow" and "Negative Money Flow":
MR = PMF / PMF
"Positive Money Flow" is the total value of all positive money flows for the specified time period.
"Negative Money Flow" is the total value of all negative money flows for the specified time period.
4. "Money Ratio" (MR) is calculated as follows:
MR = POSITIVE MONEY FLOW / NEGATIVE MONEY FLOW
Where
C — current bar close price;
C (-1) — Close of the previous bar;
Volume — current bar volume.
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Money Flow Index (MFI) signals:
- if a new price high is confirmed by a new indicator high it means that the bullish trend is strong;
- if a new price bottom is confirmed by indicator bottom is means that the bearish trend is strong;
- bullish divergence warns of the weakness of the uptrend. Bearish convergence warns of the weakness of the downtrend.
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+7 (495) 710-76-76
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© 1998—2008 «Alpari» |
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