Money Flow Index (MFI) explained: the settings, the levels and how to use it
The Money Flow Index is often called volume-weighted RSI, and that is close to exactly what it is. This guide is what it measures, how it differs from RSI, what its settings change, and the comparisons you can build a SixOne8 condition from. It needs trading volume, which US stocks and ETFs carry — coming soon on Elite — and the forex and crypto feeds do not.
What MFI measures
For each bar, take the typical price — high, low and close added together and divided by three — and multiply it by the bar's volume. That is the bar's money flow. If the typical price is higher than the bar before, the flow counts as inflow; if lower, as outflow; if unchanged, as neither. Over the last N bars, MFI compares total inflow with total outflow and puts the answer on a 0 to 100 scale, the same way RSI does with gains and losses.
So the two differ in what they count. RSI weighs how far each close moved; MFI weighs how much traded on bars that moved up against bars that moved down. A run of small up-moves on heavy volume can lift MFI further than RSI. Readings above 80 are conventionally called "overbought" and below 20 "oversold" — names for regions of the scale, not statements about what happens next.
MFI settings
- Period. How many bars the inflow and outflow are summed over, fourteen by default. A shorter period reacts faster and reaches the extremes more often; a longer one stays nearer the middle. It is bars of the timeframe the condition reads.
- Threshold. The level the condition compares against, 80 by default, anywhere from 0 to 100.
Two edge cases are handled deliberately. A window with outflow but no inflow reads 0, and one with inflow but no outflow reads 100. A window with neither — every typical price unchanged, or no volume traded — reads 50, the middle, rather than being pushed to an extreme. A strategy using MFI applies only to markets with volume, and a bar that arrives without its volume gives no reading rather than being counted as zero.
How to use MFI in a strategy
These are the comparisons SixOne8 offers for MFI, in the builder's own words.
- Greater than / less than a level. True for every bar the reading is on that side of the threshold. A state, so an alert fires when the strategy first becomes satisfied and not again while it stays there.
- Crosses above / crosses below a level. True only on the bar where the reading moves through the threshold. A moment rather than a state — the usual choice for the condition that should trigger the strategy.
MFI(14) on 1h · crosses above · 20
Read it as a sentence: on the hourly chart, the fourteen-period Money Flow Index has just moved up through 20. That is what the scanner evaluates at each hourly close, and what the alert will say if it is the condition that completed the strategy.
MFI or RSI?
On a market with volume, the two usually agree about direction and differ about degree. If you already use an RSI condition, swapping in MFI at the same period is the simplest way to ask whether weighting by volume changes which moments count — run both through the same test and compare. Using both in one strategy mostly repeats the same question.
Like RSI, an MFI condition on its own matches often on a fast timeframe. Most strategies pair it with a slower condition that describes the context, such as price above a long moving average, so MFI decides the moment and the other condition decides whether it counts.
Does MFI work on your market?
Run an entry check. It will tell you whether, on the stock or ETF you care about, the moments this condition fired moved any differently from a random moment over the history tested. That is a fact about the past on that market, and it is the only kind of fact a test here produces.