The indicator runs from 0 to 100, with the close to 100 being over bought and the closer to 0 being oversold. It is important to see if this indicator fits your investing or trading style by using it in a demo account. You could also use this in conjunction with other momentum indicators to help narrow your areas to buy and sell. Again, this will never be 100% accurate, but it will certainly allow you to watch a stock or equity more closely at the appropriate times, allowing you to allocate your time on more important things.
Money-Flow-Index
 | By Nathan Young | Macroaxis Story |
The Money Flow Index is a tool that takes into account volume and the flow of money in either direction, and plots it as an indicator on your chart. This is great tool because it can give you an indication of where money is going and if the stock is over bought or over sold. If you have ever looked at a chart by itself and wondered how much higher or lower it could go, this indicator would give you an idea of when the price may reverse.
Updated over a year ago View currently updated edicational stories | Filter Money Flow Index |
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Reviewed by Gabriel Shpitalnik
How to implement this in your trading or investing is to plot the indicator and adjust it to how you see fit. Then, you can look at major support and resistance levels and decide the areas you want to watch. When the stock price beings to reach those areas, analyze the Money Flow Index and see where the money is flowing and how much volume is behind it. This is a momentum indicator and can help to narrow in on your reversals you seek in the chart.
Just like an indicator, they are not 100% accurate in predicting where the market will turn. I promise there are charts out there where the indicator is in the overbought category and will stay there while the stock keeps appreciating. This is when you have to take a look at the fundamental data and understand where the company is potentially headed, independent of the technical data. Reverse this to the sell side, and the indicator can do the exact same thing. This indicator will work on every time frame and does not suite one over the other.
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