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Money Flow Index (MFI) and Chaikin Money Flow: Formulas Explained

The money flow index (14) on typical price with its 80/20 conventions, and Chaikin money flow (20): formulas, examples and limits.

Reviewed · Sources at the end · How Vyreon measures
Vyreon's per-security reports are not live yet; this page describes what they will measure. Examples are illustrative.

The money flow index (MFI) is a 0–100 indicator that compares the volume traded on days when the typical price rose with the volume on days when it fell, over 14 sessions. Its authors described it as a volume-weighted RSI. Chaikin money flow (CMF) is a related measure from −1 to 1 based on where each session closed within its range.

Money Flow Index Formula

  1. Typical price (TP) = (high + low + close) ÷ 3
  2. Raw money flow = TP × volume
  3. Over the last 14 sessions, money flow is positive when TP rose from the previous session and negative when it fell; unchanged sessions are left out.
  4. Money flow ratio = positive flow ÷ negative flow
  5. MFI = 100 − 100 ÷ (1 + money flow ratio)

Illustrative example: positive flow of 6.0 million and negative flow of 2.0 million give a ratio of 3 and an MFI of 100 − 100 ÷ 4 = 75.

MFI 80 And 20 Conventions

By convention, an MFI of 80 or above is called overbought and 20 or below oversold. Vyreon labels these as "by convention". If there is no negative flow in the window, MFI is 100; if there is no flow in either direction, Vyreon reports 50.

Chaikin Money Flow Formula (20)

For each session, a multiplier measures where the close sits in the day's range:

Multiplier = ((close − low) − (high − close)) ÷ (high − low)

It is +1 for a close at the high, 0 at the midpoint and −1 at the low. Then:

CMF = Σ (multiplier × volume) ÷ Σ volume over 20 sessions

A session with no range (high equals low) adds its volume to the total but no money flow. A positive CMF means, on volume-weighted balance, sessions closed in the upper half of their ranges.

How Vyreon Calculates Them

Vyreon computes MFI(14) and CMF(20) on daily bars adjusted for splits and dividends, with split-adjusted volume. MFI comes with its condition label (overbought by convention, oversold by convention or neutral).

What Money Flow Does Not Tell You

  • Despite the name, neither measures money entering or leaving a stock. Every trade has a buyer and a seller; these indicators only weight volume by price behaviour.
  • Overbought and oversold are labels for a reading, not instructions or forecasts. Readings can stay extreme for a long time.

Related: RSI · on-balance volume · relative volume · stochastic oscillator

Sources

  • Gene Quong and Avrum Soudack, "Volume-Weighted RSI: Money Flow", Technical Analysis of Stocks & Commodities (March 1989).
  • Marc Chaikin, who developed Chaikin money flow.

The 80 and 20 MFI levels are trading conventions; we know of no peer-reviewed source establishing them.