Money Flow Index
MFI is "RSI with volume": the same 0–100 scale and 80/20 extremes, but every up and down is weighted by real money — an oscillator that sees both price and volume.
What it is
The Money Flow Index (MFI) extends the RSI idea into the volume dimension: money flow is Typical Price ((H+L+C)/3) × Volume (positive = inflow, negative = outflow), then the RSI-style ratio of positive to negative flow maps to 0–100. Above 80 is overbought, below 20 oversold — RSI's reading convention with real-money weight in every print. Often called the volume-weighted RSI.
Origin
MFI was developed by Gene Quong and Avrum Soudack (published in Stocks & Commodities around 1994) — a bridge between Chaikin's CLV thinking (A/D) and Wilder's RSI formula. It is a flagship of the 1990s volume-price wave. Note: it shares its abbreviation with Bill Williams's Market Facilitation Index — entirely different tools. MT5 ships it as iMFI with a default of 14.
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The computation chain (default 14):
The formula is structurally identical to RSI (gain/loss ratio → positive/negative flow ratio); only two things change: the typical price instead of the close, and the volume multiplier. Quong/Soudack's extreme lines: 80/20 (stricter than RSI's 70/30) — because volume makes extremes more meaningful.
Worked example
An example of how volume weighting changes the read:
- Case A: price rises 2% on average volume — RSI and MFI climb together (normal weighting).
- Case B: price rises 2% on tripled volume — RSI walks as usual; MFI surges: a volume-endorsed rise, the money-weighted reading spikes.
- Case C: price rises 2% on half volume — MFI barely moves: a dry rally the money does not endorse.
The same price gain can produce tripled MFI differences — it automatically separates "real-money rallies" from "dry rallies". That is its edge over pure-price RSI: absent volume cannot hide in MFI.
How to read it
Reading MFI (0–100, 80/20 extremes):
| Range | Common interpretation |
|---|---|
| 80 – 100 | Overbought: money extremely inflowing — strong but stretched; persists in trends |
| 50 – 80 | Bullish: net inflows dominant |
| 20 – 50 | Bearish: net outflows dominant |
| 0 – 20 | Oversold: money extremely outflowing — weak but extreme; bounces start here in ranges |
| MFI crossing 50 | The money-flow direction switch at the midline — more "real" than price crosses |
MFI's divergence use mirrors RSI's and is more reliable (volume-weighted): price new highs without MFI new highs = "a top without money". Quong/Soudack's advanced trick: an extreme reading (>90/<10) followed within 1–2 bars by a reversal bar is a high-win-rate short-term turn signal.
Common signals & usage
80/20 extreme re-entry
MFI escaping the extreme zone back inside — volume-plus-price confirmed reversion, more reliable than the RSI equivalent.
Divergence
Price new highs without MFI new highs — the rally lacks real money; MFI divergences carry volume weight, heavier than price-momentum divergences.
The reversal bar after extremes
An MFI above 90 or below 10 followed by a reverse bar within 1–2 bars — Quong/Soudack's short-term turn signal.
The 50 filter
MFI persistently above 50 = net money inflow (a bullish backdrop); pair with trend tools for entry direction.
Limitations & common mistakes
- Do not confuse with BW MFI: the abbreviation collides — MT5's iMFI is this volume-weighted RSI; iBWMFI is Williams's volume-price efficiency histogram. Completely different.
- The typical-price gap blind spot: MFI compares typical prices, not closes — gaps may barely move the TP and thus go unweighted; gap-heavy instruments should add OBV/A/D.
- Giant-volume distortion: an event day's huge volume dominates the 14-period flow window — readings are skewed until the window rolls over.
- The usual flattening: in strong trends MFI parks above 80 — the old sin of fading overbought in trends applies equally.
- The tick-volume discount: forex "money flow" is based on quote-tick volume — direction survives, precision below real-volume markets.
MFI in MT5
MFI is a built-in MT5 oscillator (single line). The MQL5 function for programmatic use is iMFI:
| MQL5 function | iMFI() |
| Default period | ma_period=14 |
| Volume type | VOLUME_TICK / VOLUME_REAL (selectable) |
| Buffers | 0=main buffer (MFI value) |
| Display window | Sub-window (guides at 20 / 80) |
iMFI's ma_period is the money-flow window (same role as RSI's period). applied_volume selects tick/real — forex has only tick. MT5 presets 20/80 guides; Quong/Soudack's 90/10 extreme lines can be added in the levels tab.
Behavior across timeframes
15-minute
A high-frequency reversion field: extreme signals fire often but event bars interfere — read streaks, not single bars
1-hour / 4-hour
The main swing period for money extremes; divergence structures are clear
Daily
The classic home: 80/20 extremes and divergences are most representative on dailies
Weekly
Weekly MFI extremes are rare — heavyweight quarter-scale money extremes
Indicator combinations
Common pairings for MFI:
- With RSI: RSI weighs price momentum, MFI weighs money flow — a joint divergence (price new highs, RSI weak, MFI weaker) is the strongest top signal. RSI
- With OBV: OBV books the cumulative flow, MFI reads the extreme state — the ledger-plus-thermometer combo. OBV
- With A/D: A/D reads daily flow structure, MFI reads window extremes — complementary money-flow perspectives. AD
FAQ
Q How is MFI different from RSI?
Identical formula structure with volume weighting: RSI uses the close-based gain/loss ratio; MFI uses typical price × volume (a tripled-volume day outweighs a shrunk one). MFI's extremes and divergences are therefore more reliable — a rally without money cannot lift MFI.
Q Are MFI and BW MFI the same thing?
No — the abbreviations collide: MFI (iMFI) is Gene Quong/Avrum Soudack's Money Flow Index, a 0–100 volume-weighted RSI; BW MFI (iBWMFI) is Bill Williams's Market Facilitation Index, a volume-price efficiency histogram. Both ship in MT5 with entirely different algorithms and uses.
Q Why does MFI use 80/20 instead of RSI's 70/30?
Quong/Soudack's recommendation: adding volume makes "extreme" more extreme (volume-backed extremes carry more weight), so the 80/20 thresholds are stricter than RSI's 70/30 to cut false signals. Advanced users add 90/10 for extreme extremes (the reversal-bar signal).
Q Can I still read MFI after a giant-volume event day?
Short-term distortion, then recovery: one giant day dominates the 14-period flow window's numerator and denominator — readings are skewed for 1–2 days. Wait for the window to roll over (2–3 days) before reading extremes and divergences; on the event day itself, read only the volume-price direction.
Q How do I add MFI in MT5?
Menu: Insert → Indicators → Oscillators → Money Flow Index, or drag it from the Navigator onto a sub-window. Default period 14 with 20/80 guides preset — stock symbols can switch to real volume where the broker provides it.
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