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Indicators and ToolsIntermediate

Money Flow IndexMFI

The Money Flow Index is a 0–100 oscillator that combines price and volume to measure buying and selling pressure, often called a volume-weighted RSI. Readings above 80 are overbought and below 20 oversold; the default period is 14.

The RSI looks only at price. The Money Flow Index adds volume, so a rise on heavy volume counts for more than a rise on light volume. That makes it useful for judging whether a move has real money behind it. This entry explains how MFI is calculated, how to read it and how it compares with RSI.

Category
Indicators and Tools
Reading time
3 min
Also called
Volume-weighted RSI, MFI indicator
Updated

MFI in plain words

MFI uses price and volume to measure buying and selling pressure, and it is also known as a volume-weighted RSI.1

Money flow counts as positive when the typical price rises and negative when it falls; their ratio goes into an RSI-style formula that runs from 0 to 100.1

MFI above 80 is usually treated as overbought and below 20 as oversold.1

How MFI is calculated, step by step

  1. Typical price

    (High + low + close) ÷ 3 for each period.

  2. Raw money flow

    Typical price × volume.

  3. Sort the flows

    Positive if typical price rose, negative if it fell.

  4. Money flow ratio

    14-period positive flow ÷ negative flow.

  5. MFI

    100 − 100 ÷ (1 + ratio).

  6. Read the zones

    Above 80 overbought, below 20 oversold. See Overbought and Oversold.

Worked examples

Example 1 — Raw money flow

≈ $2.12m

High $22, low $20, close $21.50, volume 100,000.

Example 1 — Raw money flow — calculation
Typical price($22 + $20 + $21.50) ÷ 3 ≈ $21.17
Raw money flow$21.17 × 100,000 ≈ $2.12m

Raw money flow is essentially dollar volume: volume times the typical price.1

Example 2 — Calculating MFI

MFI 80 — overbought line

Over 14 periods, positive money flow is $12m and negative money flow is $3m.

Example 2 — Calculating MFI — calculation
Money flow ratio$12m ÷ $3m = 4
MFI100 − 100 ÷ (1 + 4) = 80

The ratio of positive to negative flow is plugged into an RSI-style formula.1

Example 3 — Bearish divergence

Weakening buying pressure

Price makes a higher high, but MFI peaks at 72 after an earlier peak at 85.

Example 3 — Bearish divergence — calculation
PriceHigher high
MFILower high

As a volume-linked momentum oscillator, MFI is best suited to spotting reversals and price extremes.1 See Divergence.

MFI vs RSI

AspectMFIRSI
InputsPrice and volumePrice only
OverboughtAbove 80Above 70
OversoldBelow 20Below 30
Default period1414. See Relative Strength Index

How traders use MFI

  • Overbought and oversold

    Flagging unsustainable extremes.

  • Divergences

    Price and money flow disagreeing.

  • Volume confirmation

    Is a breakout backed by money? See Volume.

  • Failure swings

    MFI failing to break a prior peak or trough.

Advantages and disadvantages

Advantages

  • Adds volume to a classic momentum view.
  • Clear 0–100 scale.
  • Good for spotting exhaustion.

Disadvantages

  • Can stay overbought in strong trends.
  • Needs reliable volume data.
  • Noisy on short time frames.

Going deeper

Read as far as you need. Each level builds on the one before it.

Who created it

Beginner

MFI was created by Gene Quong and Avrum Soudack, and 14 periods is both the default and the setting its creators recommend.1

Different levels than RSI

Intermediate

RSI usually treats 70 and 30 as extremes, while MFI uses 80 and 20.2 The wider levels allow for the extra swings that volume adds.

Strong trends

Advanced

In a strong uptrend MFI can become overbought and stay there while prices keep rising, so overbought alone is not a sell signal.1 See Trend Following.

Common mistakes

  1. Selling every reading above 80

    Strong trends stay overbought.

  2. Using it on assets with poor volume

    Forex spot volume is often incomplete. See Tick Volume and Real Volume.

  3. Treating it like RSI

    Its extreme levels differ.

  4. Ignoring divergence context

    Divergences can last a long time.

Check your understanding

Test yourself before moving on. Each answer comes with an explanation.

Q1Positive flow $6m, negative flow $6m. What is the MFI?
Q2Which MFI reading is oversold?

Key points to remember

  1. MFI combines price and volume into a 0–100 oscillator.
  2. It is often called a volume-weighted RSI.
  3. Above 80 is overbought; below 20 oversold.
  4. Divergences can warn of reversals.
  5. Strong trends can keep it at extremes.

Frequently asked questions

Is MFI better than RSI?

Not always; it adds volume information, which helps when volume data is reliable.

What period should I use for MFI?

14 is the default recommended by its creators.

Can MFI be used in crypto?

Yes, though exchange volume data quality varies.

Further learning

Sources

This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.

  1. StockCharts ChartSchool. Money Flow Index (MFI) (opens in a new tab) Checked .
  2. StockCharts ChartSchool. Relative Strength Index (RSI) (opens in a new tab) Checked .

Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.