MFI Overview
**The Money Flow Index (MFI)** is RSI applied to volume-weighted typical price — often called
The Money Flow Index (MFI) is RSI applied to volume-weighted typical price — often called “Volume RSI.” It measures buying and selling pressure by combining price and volume data. MFI above 80 = overbought with high volume (strong conviction), MFI below 20 = oversold.
MFI adds a volume dimension that standard RSI lacks. An overbought MFI reading means not just that prices are high, but that significant volume is driving the move — making the signal more reliable than price-only momentum.
How Money Flow Index Works
Section titled “How Money Flow Index Works”Core Concept
Section titled “Core Concept”- Calculate MFI value from the input price/volume data
- Apply smoothing if applicable
- Compare to threshold or signal line for signal generation
- Interpret: Signals indicate momentum direction or extremes
Key Characteristics:
- Momentum Indicator = Measures momentum direction and strength
- Signal Line Available = Yes
- Bounded = Yes (0 – 100)
Visual Interpretation
Section titled “Visual Interpretation”MFI Behavior:
- Volume-confirmed overbought
- Volume-confirmed oversold
- Signal line crossovers provide timing signals
Trading Signals Available on Reversion
Section titled “Trading Signals Available on Reversion”These are the signal names you select when configuring MFI in the algorithm builder or via the MCP agent:
| Signal | Triggers When | Typical Use |
|---|---|---|
mfi_above_threshold | MFI rises above threshold (e.g., 80) | Volume-confirmed overbought |
mfi_below_threshold | MFI falls below threshold (e.g., 20) | Volume-confirmed oversold |
mfi_above_signalLine | MFI crosses above its signal line | Volume momentum accelerating |
mfi_below_signalLine | MFI crosses below its signal line | Volume momentum decelerating |
Display: Separate pane
Category: Momentum
Threshold range: 0 – 100
Key Characteristics
Section titled “Key Characteristics”{% tabs %} {% tab title=“Strengths” %} What Money Flow Index Does Well:
- Clear Overbought/Oversold Signals
- Combines well with trend filters
- Signal line crossovers signals for entry timing {% endtab %}
{% tab title=“Limitations” %} What to Watch Out For:
- Lagging: Smoothing introduces delay
- Context needed: Combine with trend indicators for direction {% endtab %}
{% tab title=“Best Use Cases” %} When to Use Money Flow Index:
- Mean Reversion Strategies: Trade MFI extremes/crossovers with trend confirmation
- Filter for Other Indicators: Use as confirmation alongside price-based signals
When NOT to Use Money Flow Index:
- Standalone System: Always combine with trend context
- Ignoring Market Regime: Different behavior in trends vs ranges {% endtab %} {% endtabs %}