MFI is the abbreviation for the Money Flow Index, an oscillating indicator of technical securities analysis. It was first published by Gene Quong and Avrum Soudack and is an extension of the Relative Strength Index (RSI). The MFI also has a volume component.

One of the starting points for the idea of the Money Flow Index was that striking turning points in the price trend are marked by an increase in volume. Indicators that only take price changes into account cannot show the whole picture. The Money Flow Index is designed to measure the strength of money as it flows in and out of the market.


How the MFI is calculated 

The MFI fluctuates between 0 and 100 and indicates whether a security tends to be overbought or oversold. As with the RSI, the basis for calculating the MFI is the typical price of a security, which is the average of the highest, the lowest and the closing price of a day. If this increases compared to the previous trading day, this increase indicates a positive money flow and the MFI climbs. 

Formula: MFI = 100 - (100/(1 Money Ratio)) 

Conversely, if there is a fall in prices, there is a negative money flow and the MFI slides. Due to the multiplication of the prices with the daily turnover, which usually increases with strong price swings, the swings of the MFI are significantly higher than those of the RSI. This makes market exaggerations even more obvious.

Recommendations for analysts

The MFI generates buy signals especially when the indicator is in the oversold zone between 0 and 20 points and crosses the border to the neutral zone. On the other hand, it is advisable to sell securities when the MFI has risen into the overbought zone between 80 and 100 and then falls downwards into the neutral zone.

If the MFI changes as a result of new data in such a way that the 50 line is crossed from below to above, this is generally interpreted as a buy signal. If, on the other hand, the centre line is crossed from top to bottom, this indicates a sell signal.

Likewise, it is possible to derive indications from the comparison of MFI and price value. If, for example, the price of a security is still showing an upward movement while the MFI is already falling, these are signs that an upward trend will soon end.

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ROC, a trend-following indicator 

Here is explanation used by thai traders: ตัวบ่งชี้การติดตามแนวโน้ม ROC เป็นไปตามแนวโน้มราคาของการรักษาความปลอดภัยพื้นฐานและทําเครื่องหมายโซนการกลับรายการแนวโน้มค่อนข้างแม่นยํา. ยิ่งการตั้งค่าช่วงเวลาสั้นลงใน Exness เป็นโบรกเกอร์ฟอเร็กซ์ระดับโลก ยิ่งตัวบ่งชี้แกว่งไปมารอบ ๆ เส้นกลางและยิ่งตอบสนองกับความผันผวนของราคาที่น้อยลง.

he trend-following indicator ROC follows the price trend of the underlying security and marks its trend reversal zones quite accurately. The shorter the setting of the intervals, the more the indicator oscillates around its centre line and the faster it reacts to smaller price fluctuations.

Trading signals with the ROC 

If the ROC is in positive territory and shows a rising tendency, this indicates a continuation of the upward trend. Similarly, a falling ROC in the same range indicates a possible end to the upward movement. If the ROC is in negative territory while showing an upward tendency, this indicates a continuation of the downward trend. Correspondingly, a falling ROC in the same range indicates a possible end of the downward movement.

With the ROC, classic buy signals arise when the indicator crosses the centre line from the bottom to the top. In contrast, sell signals on the ROC occur when the Rate of Change crosses the centre line from top to bottom.

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