Money Flow Index - MFI

When it’s hard to see which way the money is a-flowin’, it’s time to break out oscillators. Oscillators are indicators that can be used to help figure out what’s going on for stocks that aren’t obviously trending one way or another.

What’s this got to do with the Money Flow Index, you ask? The Money Flow Index is one of these oscillators, which can help determine if a security has been overbought or oversold. But the Money Flow Index—the MFI—is a special oscillator. The MFI uses not just price information, but also volume information, which is the number of times a security has changed hands.

While the MFI is special for weighting security prices with security volume, giving investors who use it earlier signals than other popular oscillators, it can be a bit hard to read, and may give contradictory information when compared to what other oscillators are saying, which can lead to some confusion.