. . .more on Formulas 

. . . more on Charts 

Above is a Daily Candlestick Chart of Apple Computers (AAPL).  The blue line in the lower window pane represents the Money Flow Index, defined by the preferences below. The red and green bars in the middle pane represent the volume.

. . . more on Preferences 

• Smoothing Type - The smoothing type used to smooth the resulting MFI values.

• Smoothing Period - The smoothing period used to smooth the resulting MFI values.

• Money Flow Period - Number of bars used to compute each MFI value.

• Ref Line (1, 2) - Horizontal Reference Line values.

• Line Color - Color used for the MFI line in the chart.

Divergence between MFI and the price direction can also be indicative of a reversal. If price is trending higher and MFI is decreasing over that period, a market top may occur.

Here is an example of a Money Flow Index calculation.  Let's say you have specified a period of 10, and you are adding your indicator to a daily chart.  For each bar, a money flow value is calculate by multiplying the volume by the average price (HI + LO + CL) / 3.  If the closing price of the bar is greater than the closing price of the previous bar, then the money flow is considered positive money flow.  If the closing price of the bar is less than the closing price of the previous bar, then the money flow is considered negative money flow.  If the price is unchange, the money flow is not considered in the calculation of the money flow index.  The money flow index is calculated by summing up all the positive money flows into one value (PMF) and all the negative money flows into another value (NMF) over the 10 bar period, and then using these values in the following equation:

MFI = 100.0 - (100.0 / (1.0 + (PMF / NMF)))

The resulting MFI is then smoothed using the smoothing parameters specified.  In the case above, it is smoothed with a 7 period simple moving average.  To remove smoothing, just specify a 1 period moving average.

The result is always a value between 0.0 and 100.0