MoneyFlow

Description

The Money Flow formula compares today's average to yesterday's average price and weights the average using volume.

The comparison is an integral part of this calculation. For each point in the series, the comparison determines whether a bar's average price is greater than the preceding bar's average price. If it is,, the formula adds current volume to a positive money flow value. If it's not, the formula adds current volume to a negative money flow value.

The formula then divides the positive money flow value by the negative money flow value. This quotient is then employed in a Relative Strength calculation.

Formula

MoneyFlow(SERIES, Length=14, OverSold=20, OverBought=80)=begin

  retval = MoneyFlow_1($1, Length)

end

Parameters

SERIES

The SERIES directive makes this formula available as a Formula Study. SERIES refers to the instrument in a chart. SERIES does not become a study parameter.

Length

The number of periods to calculate. The default is 14.

OverSold

Currently unused.

OverBought

Currently unused.

Return Value

Money Flow

Examples

Comments

The Money Flow measures the relative strength of money flowing into and out of a market by evaluating price and volume.

If the value rises above 80, the market is said to be overbought. If the value descends below 20, the market is said to be oversold.

When price activity and the study line diverge, a trend reversal may be indicated.