Money flow index

     

Description

The Money Flow Index (MFI) is a momentum indicator that measures the flow of money inlớn & out of a security over a specified period of time. It is related to lớn the Relative sầu Strength Index (RSI) but incorporates volume, whereas the RSI only considers price. The MFI is calculated by accumulating positive and negative Money Flow values (see Money Flow), then creating a Money Ratio. The Money Ratio is then normalized into the MFI oscillator khung.

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How this indicator works

Oversold levels typically occur below trăng tròn and overbought levels typically occur above sầu 80. These levels may change depending on market conditions. Level lines should cut across the highest peaks & the lowest troughs. Oversold/Overbought levels are generally not reason enough to buy/sell; and traders should consider additional technical analysis or research to confirm the security"s turning point.

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Keep in mind, during svào trends, the MFI may remain overbought or oversold for extended periods.If the underlying price makes a new high or low that isn"t confirmed by the MFI, this divergence can signal a price reversal.

Calculation

The Money Flow Index requires a series of calculations.

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First, the period"s Typical Price is calculated.Typical Price = (High + Low + Close)/3Next, Money Flow (not the Money Flow Index) is calculated by multiplying the period"s Typical Price by the volume.Money Flow = Typical Price * VolumeIf today"s Typical Price is greater than yesterday"s Typical Price, it is considered Positive Money Flow. If today"s price is less, it is considered Negative sầu Money Flow.Positive sầu Money Flow is the sum of the Positive sầu Money over the specified number of periods.Negative sầu Money Flow is the sum of the Negative sầu Money over the specified number of periods.The Money Ratio is then calculated by dividing the Positive Money Flow by the Negative sầu Money Flow.Money Ratio = Positive sầu Money Flow / Negative Money FlowFinally, the Money Flow Index is calculated using the Money Ratio.

Technical analysis focuses on market action — specifically, volume and price. Technical analysis is only one approach lớn analyzing stocks. When considering which stocks khổng lồ buy or sell, you should use the approach that you"re most comfortable with. As with all your investments, you must make your own determination as khổng lồ whether an investment in any particular security or securities is right for you based on your investment objectives, risk tolerance, and financial situation. Past performance is no guarantee of future results.


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