Skip to content

Commit

Permalink
Merge branch 'master' of github.com:tradingstrategy-ai/docs
Browse files Browse the repository at this point in the history
  • Loading branch information
miohtama committed May 21, 2024
2 parents 95068de + d01e854 commit 77f031a
Show file tree
Hide file tree
Showing 2 changed files with 26 additions and 1 deletion.
2 changes: 1 addition & 1 deletion deps/trade-executor
Submodule trade-executor updated 264 files
25 changes: 25 additions & 0 deletions source/glossary.rst
Original file line number Diff line number Diff line change
Expand Up @@ -5381,4 +5381,29 @@ and algorithmic trading.

- :term:`OHLCV`

- :term:`Average Directional Index (ADX)`

Money Flow Index (MFI)

The Money Flow Index (MFI) is a :term:`technical indicator` used in :term:`quantitative finance` and trading to measure the strength and direction of money flowing in and out of a security over a specific period, typically 14 periods. It combines both price and volume data to provide insight into the buying and selling pressure within a security.

Traders use the Money Flow Index to identify overbought or oversold conditions in an asset, divergence between price and money flow, and potential :term:`trend` reversals.

The calculation of the Money Flow Index involves several steps:

- **Typical Price (TP)**: This is the average of the high, low, and closing prices for each period. It's calculated as (High + Low + Close) / 3.
- **Money Flow (MF)**: This is the product of the Typical Price and the volume traded for each period. If the Typical Price is higher than the previous period's Typical Price, it's considered positive money flow, and if it's lower, it's considered negative money flow.
- **Money Flow Ratio (MFR)**: This is the ratio of positive money flow to negative money flow over a specific period (usually 14 periods). It's calculated as (14-period Positive Money Flow) / (14-period Negative Money Flow).
- **Money Flow Index (MFI)**: Finally, the Money Flow Index is calculated using the formula 100 - (100 / (1 + MFR)). It ranges from 0 to 100. A high MFI value suggests that the security is overbought, indicating a potential reversal, while a low MFI value suggests that the security is oversold, indicating a potential buying opportunity.

- :term:`Technical indicator`

- :term:`Trading Strategy`

- :term:`Trend`

- :term:`Mean reversion`

- :term:`OHLCV`

- :term:`Average Directional Index (ADX)`

0 comments on commit 77f031a

Please sign in to comment.