MFI: Money Flow Index Explained

The Money Flow Index (MFI) is often called the volume-weighted RSI — and that's exactly what it is. Where RSI asks "how strong were the up moves?", MFI asks "how much money moved on the up moves?" A rally on heavy volume counts for more than the same rally on air.

How MFI Works

For each bar, typical price × volume gives money flow, classified positive or negative by whether typical price rose or fell. The ratio over the period (default 14) is scaled 0–100:

• Above 80: overbought with real money behind the reading.
• Below 20: oversold.
• Divergence with price: the money is leaving before price does.

Because volume spikes at true extremes, MFI tends to hit its bands earlier and more sharply than RSI.

How to Trade It

1. Extreme reversal. Buy the cross back up through 20, sell the cross down through 80 — in ranging conditions with a trend filter.

2. Divergence. Price new high + MFI lower high = distribution; the volume-weighting makes this warning more urgent than RSI's version.

3. 50-line trend gate. Above 50, dips are for buying; below 50, rallies are for selling.

Building It in Setup.Cash

Add MFI in the strategy builder (requires volume — ideal for crypto and stocks) and condition on the 80/20/50 levels exactly like RSI. A robust combo: Bollinger Band touch + MFI extreme = mean-reversion entry with both price and money-flow stretched.

Tuning

• 14: standard.
• 10: more signals for intraday systems.
• 90/10 thresholds: only the most extreme readings — rare but potent.

Related Reading

Compare with OBV (cumulative, unbounded) and CMF (bounded around zero). Three lenses on the same money-flow question — backtest which one fits your market.