The Money Flow Oscillator (MFO) is a technical indicator developed by Vitali Apirine. Being an oscillator that measures buying/selling pressure over the specified time period, it extends the range of pressure indicators such as Money Flow Index (MFI), Chaikin Money Flow (CMF), and MACD. While sharing the purpose of these indicators and some of their calculation steps, the MFO attempts to address some issues relative to them. More specifically, the research of the author shows that the MFO is more sensitive to gaps than the Chaikin Money Flow indicator and may react more quickly than the MACD.
The calculation mechanism of the MFO resembles that of the Chaikin Money Flow, however, the multiplier is calculated differently: in the case of MFO, the multiplier is based on the difference between the highs and lows from the current and preceding bars. The oscillator values fluctuate around the zero line in the -1.0 to +1.0 range, rarely reaching extreme values. When the oscillator is positive, it might indicate that the buying pressure is currently prevailing, while negative values mean exactly the opposite, i.e., that selling pressure is stronger. The MFO is said to be more efficient in strong trends, whereas in choppy markets its reliability may be challenged.
||The period on which buying and selling pressures are measured.|
||The Money Flow Oscillator.|
||The zero level.|
1. "The Money Flow Oscillator" by Vitali Apirine. Technical Analysis of Stocks & Commodities, October 2015.
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.