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  1. #1
    Nikolay.Gekht is offline Moderator
    Join Date
    Oct 2008
    Posts
    1,024

    Volume Indicator : Bill Williams' Market Facilitation Index

    Quote Originally Posted by Bill Williams
    "The MFI is a measure of the market's willingness to move the price. I cannot overemphasize the value of this indicator. It is a more truthful measure of market action than any stochastic, RSI (Relative Strength Index) or other momentum indicator."
    The MFI formula is

    MFI = (High - Low) / Volume

    MFI can be used for all time frames from 5 minutes up to daily and weekly frames.

    The indicator highlight four zones:

    MFI Up, Volume Up - the market is already on the move.
    MFI Down, Volume Down - appears when market starts to fade – lose interest in advancing further. Often this can be observed at the end of a trend..
    MFI Up, Volume Down - the market makes a progressive move, but this move is not supported by the volume (for any reason), this provides a clue that there are probably no real interest in the move yet, while certain group of market participants is trying to control and manipulate the market to their advantage.
    MFI Down, Volume Up - appears at the end of each trend. Bill Williams calls it "the strongest potential money maker" of the 4 setups. The squat bar is marked by an increasing volume yet temporary stalling price movement.
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