Money Flow Index or Smart Money Flow Index
The purpose of using MFI is to detect accumulation and distribution.
MFI is a more rigid indicator because it is volume-weighted, and is therefore a good measure of the strength of money flowing in and out of a security.
It compares "positive money flow" to "negative money flow" to create an indicator that can be compared to price in order to identify the strength or weakness of a trend. Like the RSI, the MFI is measured on a 0 - 100 scale and is often calculated using a 14 day period.
The extreme readings do not always result in major tops and bottoms.
Typical Price = ( (Day High + Day Low + Day Close) / 3)
Money Flow = (Typical Price) x (Volume)
The MFI compares the ratio of "positive" money flow and "negative" money flow. If typical price today is greater than yesterday, it is considered positive money. For a 14-day average, the sum of all positive money for those 14 days is the positive money flow. The MFI is based on the ratio of positive/negative money flow (Money Ratio).
Money Ratio = (Positive Money Flow / Negative Money Flow)
Money Flow Index = 100 - (100 / (1 + Money Ratio))
To Calculate Money Flow Index in MS Excel:.
Column values to enter formulas U have to enter
A = Company Name/date
B = Open
C = High
D = Low
E = LTP/close
F = Volumes
G = Typical Price = (Day High + Day Low + Day Close)/3 So formula =(C2+D2+E2)/3
H = Money Flow = (Typical Price) x (Volume) So formula =G2*F2
I = Positive Money Flow,So formula =IF(G2 greater than G1,H2,0)
J = Negative money flow,So formula =IF(G2 less than G1,H2,0)
K = Average Positive Money Flow(14days) So formula =SUM(I2:I15)
L = Average Negative Money Flow(14days) So formula =SUM(J2:J15)
M = Money Ratio = (Po.Money Flow/Neg.Money Flow) So formula =K15/L15
N = Money Flow Index = 100 - (100 / (1 + Money Ratio)) So formula =100-(100/(1+M15))
Pls note: replace "greater than" with symbol ">" and"less than" with symbol "<".if used any where.