Money flow index¶
A bounded price-volume oscillator comparing positive with total signed money flow over a chosen lookback period.
Core Idea¶
The money flow index is a 0–100 oscillator built from an N-period series of typical price and volume. It partitions price-volume magnitudes by price direction and reports positive flow as a share of total classified flow; it is not literal cash flow or a guaranteed forecast. Across an N-period window, positive and negative flows are totaled. Across an N-period window, positive and negative flows are totaled.
Scope of Application¶
MFI applies to ordered market price-and-volume series when the instrument, session, lookback, and calculation convention are explicit. Use it on ordered market series only with lookback, price, volume, unchanged-day, denominator, threshold, and validation conventions stated.
- Equity charts. Summarizes recent directional price-volume balance.
- Parameter studies. Compares lookback and threshold behavior across securities.
- Divergence analysis. Contrasts price highs or lows with oscillator behavior.
- Screening. Filters candidates under a declared trading rule.
- Backtesting. Tests a complete rule without treating in-sample fit as proof.
Clarity¶
The formula reveals what the index actually normalizes: positive approximate dollar flow divided by total absolute classified flow. That clarification blocks the common inference that MFI observes net money entering or leaving the market. The closest near miss sets the boundary: RSI is the closest near miss because both compare up and down periods on a bounded oscillator, but RSI weights price change rather than typical-price volume.
Manages Complexity¶
A window of highs, lows, closes, volumes, and directional changes becomes one bounded statistic. The compression enables comparison but discards intraday order flow and path detail, so identical MFI values can arise from different sequences. The central bounded comparability–path loss tradeoff is this: The 0–100 scale aids comparison while hiding the order and scale of underlying flows. A second standard thresholds–instrument variation tension matters because Fixed cutoffs simplify use but may not survive different volatility and volume regimes.
Abstract Reasoning¶
Use three linked moves: choose N, instrument, session definition, and missing-data rule; compute typical price and raw price-volume flow for each period; partition flows by change in typical price and aggregate each sign. As a collapse test, the case exits when volume is omitted, signs are assigned by another rule, or a threshold is treated as a deterministic prediction. A fourth check is to transform the two totals into the bounded oscillator with explicit zero-denominator handling. A final check is to evaluate any trading interpretation out of sample and separately from the measurement itself.
Knowledge Transfer¶
The formula transfers literally to price-volume time series with comparable sampling. Its trading thresholds do not transfer automatically across securities or regimes; the broader normalized-balance pattern belongs to Measurement, while the MFI inputs and direction rule remain domain-specific. The reviewed DAG parent relation is ; it carries the broader structural comparison without erasing the specialist conditions. A defined procedure maps market observations onto a bounded scale. It shares oscillator form but not the volume-weighted measurand.
Relationships to Other Abstractions¶
Current abstraction Money flow index Domain-specific
Parents (1) — more general patterns this builds on
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Money flow index is a kind of Measurement Prime
Money flow index is a strict kind of Measurement: The money flow index (MFI) is an oscillator that ranges from 0 to 100.
Hierarchy path (1) — routes to 1 parentless root
- Money flow index → Measurement
Neighborhood in Abstraction Space¶
Money flow index sits in a moderately populated region (52nd percentile for distinctiveness): it has near-neighbors but no dense thicket of look-alikes.
Family — Financial & Economic Ratios (22 abstractions)
Nearest neighbors
- Exchange rate — 0.88
- Total revenue test — 0.87
- Net domestic product — 0.86
- Velocity of money — 0.85
- Shrinkflation — 0.85
Computed from structural-signature embeddings · 2026-10-08