Does anyone use the Money Flow indicator on EOD? What can you tell me about this indicator? How is it calculated? Used? Thanks
I think I've seen some controversy over how it is calculated, done differently by different people. I was researching EOD systems a few years ago and I found it to be marginally useful for what I was doing but as I recall I finally dropped it from the lineup. Max
I found the calculation method for MF and pasted it below for anyone who is interested. I started looking and MF as a form of price divergence analysis, but I'm wondering if people use it in more absolute terms. For example, a RSI value > 65 would be considered bullish (in some situations, anyway). Do traders look at the absolute MF value or the slope of the MF value? Does anyone even use this indicator on end of day? Just wondering... The calculation is below: Calculation: The Money Flow Index requires a series of calculations. First, the period's Typical Price is calculated. Next, Money Flow (not the Money Flow Index) is calculated by multiplying the period's Typical Price by the volume. If today's Typical Price is greater than yesterday's Typical Price, it is considered Positive Money Flow. If today's price is less, it is considered Negative Money Flow. Positive Money Flow is the sum of the Positive Money over the specified number of periods. Negative Money Flow is the sum of the Negative Money over the specified number of periods. The Money Ratio is then calculated by dividing the Positive Money Flow by the Negative Money Flow. Finally, the Money Flow Index is calculated using the Money Ratio.
Money Flow Indicator: Shows the strength of money flow in and out of a stock. When it drops while price is still going up, it would signal a bearish sentiment. This is from OptionSmart. Is this true? Hell, I don't know. I do not use the indicator.
I wouldn't be too quick to dismiss this indicator. I don't really use it in terms of scanning for it, but I've found it to be a pretty good secondary indicator. Stocks with negative money flow are usually under pressure and not ideal buys.
Bloomberg shows it on a few stocks daily. Unfortunately, it correlates SO poorly with market action, it makes them look stoopid for continuing to feature it.
Might want to scope out this site. It is more about trading flow vs. money flow, but it is interesting. I don't subscribe to it. This link will you get a glimpse of CC: www.mcribel.com/LevelC/43576392-order.htm