Money Flow Index MFI Definition & Meaning | Technical Indicator | CSIMarket
CSI Market
Sign In | Register

Glossary

Money Flow Index MFI

Technical Indicator

The Money Flow Index (MFI) is a technical indicator that uses both price and volume data to measure buying and selling pressure in a security. The MFI is commonly used in technical analysis to determine overbought and oversold conditions in a security, as well as to identify potential trend reversals.

To calculate the MFI, a ratio of positive money flow and negative money flow is first calculated. Positive money flow is the sum of all price changes that occur on days where the typical price (average of high, low, and close) is higher than the previous day*s typical price, multiplied by the volume for that day. Negative money flow is the sum of all price changes that occur on days where the typical price is lower than the previous day*s typical price, multiplied by the volume for that day.

The MFI is then calculated by dividing the positive money flow by the negative money flow, and expressing the result as a percentage between 0 and 100. A reading above 80 is generally considered overbought, while a reading below 20 is generally considered oversold.

Traders can use the MFI to identify potential trend reversals when it diverges from the price trend. For example, if the price of a security is making higher highs, but the MFI is making lower highs, it may suggest that buying pressure is weakening and a downtrend reversal could be imminent. Conversely, if the price of a security is making lower lows, but the MFI is making higher lows, it may suggest that the selling pressure is weakening and an uptrend reversal could be imminent.




More Glossary Terms Beginning with M
  • M1 Money Supply
    M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) travelers checks of nonbank issuers; (3) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; an
    Economy Term Letter: M
  • M2 Money Supply
    M2 consists of M1 plus (1) savings deposits (including money market deposit accounts); (2) small-denomination time deposits (time deposits in amounts of less than $100,000), less individual retirement account (IRA) and Keogh balances at depository institutions; and (3) balances in retail money market mutual funds, less IRA and Keogh balances at money market mutual funds.
    Economy Term Letter: M
  • m3
    Cubic metre. A measure of volume equal to approximately 1,130 square feet (3/8-inch basis).
    Manufacturing Term Letter: M
  • MACD
    MACD is the difference between a fast Exponential Moving Average (EMA) and a slow Exponential Moving Average and the fast Moving Average is continually converging towards or diverging away from the slow Moving Average. Signal line is a the Exponential Moving Average of the MACD, plotted to identify changes in trends and market sentiment. The MACD study can be used to identify buy and sell signals.
    Technical Indicator Letter: M
  • MACT
    Maximum Achievable Control Tech- nology. Regulations being introduced in the US to limit the discharge of hazard- ous air pollutants.
    Manufacturing Term Letter: M
  • Mammography
    An X-ray of the breast with the breast in a device that compresses and flattens it.
    Health Care Term Letter: M
  • Managed Credit Card Receivables
    Refers to credit card receivables on the Firms Consolidated Balance Sheets plus credit card receivables that have been securitized and removed from the Firms Consolidated Balance Sheets.
    Financial Term Letter: M
  • Managed Receivables
    Total receivable amounts on which the company continues to perform billing and collection activities, including receivables that have been sold with and without credit recourse and are no longer reported on their Statement of Financial Position.
    Financial Term Letter: M
  • Manufacturers Manufacturing
    Establishments in the manufacturing sector are often described as plants, factories, or mills, and characteristically use power-driven machines and material-handling equipment. Manufacturing establishments may process materials, or may contract with other establishments to process their materials for them. Both types of establishments are included in manufacturing.
    Manufacturing Term Letter: M
  • Mark To Market
    The valuation at fair value, using prevailing market prices, at a specified point in time.
    Financial Term Letter: M
  • Mark To Market Exposure
    A measure, at a point in time, of the value of a derivative or foreign exchange contract in the open market. When the mark-to-market value is positive, it indicates the counterparty owes the Firm and, therefore, creates a repayment risk for the Firm. When the mark-to-market value is negative, the Firm owes the counterparty; in this situation, the Firm does not have repayment risk.
    Financial Term Letter: M
  • Marker
    Indicator of the presence of a specific kind of tumor, identifiable by means of specific laboratory tests.
    Health Care Term Letter: M