# Money Flow Index Trick

1. Find out the previous day’s high and low.
2. Find out current day’s high and low at any point of time.

3. Note down 2 fractions (0.45 and 0.75)
4. Find the range of previous day. (Previous day high – Previous day low)
5. Multiply the range for previous day with the two fractions from step 3. (0.45 and 0.75). Mark this result as MF1 and MF2.
6. Now find current day’s range (Today’s high – Today’s low)
7. Find out whether current day’s range is below MF1, between MF1 and MF2 or above MF2.
8. If current day’s range is below MF1, then breakout levels are Upside Breakout = Today’s low + MF1. Downside Breakout = Today’s high – MF1.
9. If current day’s range is between MF1 and MF2, then breakout levels are Upside Breakout = Today’s low + MF2. Downside Breakout = Today’s high – MF2.
10. If current day’s range is above MF2, then DO NOT TRADE.
11. Once we know the breakout levels, we can buy above Upside Breakout and sell below Downside breakout.
12. Target should be 0.7%.
13. Stop loss should be 0.8% or if the underlying is trading below our buy price or above our sell price for more than 10 min, then square off the position.
14. This trading system is best suitable for those who can trade in multiple stocks and are very active in trading. One should not expect more than 1% from this system.

Note: This system should be used till 2 pm (or 1 and half hour before market closes. Because there is no point finding breakouts in last minutes of trading session)

*The Money Flow Index (MFI)* is an oscillator that uses both price and volume to measure buying and selling pressure. MFI starts with the typical price for each period.

Money flow is positive when the typical price rises (buying pressure) and negative when the typical price declines (selling pressure).

A ratio of positive and negative money flow is then plugged into an RSI formula to create an oscillator that moves between zero and one hundred.

As a momentum oscillator tied to volume, the Money Flow Index (MFI) is best suited to identify reversals and price extremes with a variety of signals.