OPEN-SOURCE SCRIPT
(mab) Money Flow - MMF
Updated
This indicator implements the (mab) Money Flow (MMF). The MMF is calculated using a formula inspired by RSI. In contrast to RSI, MMF uses the average of open, high, low and close as price source. This price is then multiplied with the volume as input for the RSI like formula to calculate the value.
Features:
- Volume weighted price momentum oscillator
- Uses average of open, close, high and low as price component to make the signal less choppy while still as fast
- EMA on MMF
- Highlighting when EMA is in oversold or overbought area
- Alarms
Note that the MMF formula is different than the formula used for other money flow indices like MFI or CMF.
Why do we need another money flow indicator if there are already many established ones? Well I used and tested many money flow indicators including MFI and CMF among others. However, none of them showed the results I was looking for. MFI for example uses a simpler formula for the calculation, which results in a different reading that isn't showing divergences as clearly as I would like. CMF on the other hand has no defined maximum or minimum (similar to MACD) so that it's difficult to determine overbought and oversold values. The MMF is an oscillator with a minimum value of 0 and a maximum value of 100 like RSI. The usage of the average of open, close, high and low as price element makes it less choppy compared to RSI while it still reacts as fast to movements.
https://www.tradingview.com/x/HIjq9tEz/
Features:
- Volume weighted price momentum oscillator
- Uses average of open, close, high and low as price component to make the signal less choppy while still as fast
- EMA on MMF
- Highlighting when EMA is in oversold or overbought area
- Alarms
Note that the MMF formula is different than the formula used for other money flow indices like MFI or CMF.
Why do we need another money flow indicator if there are already many established ones? Well I used and tested many money flow indicators including MFI and CMF among others. However, none of them showed the results I was looking for. MFI for example uses a simpler formula for the calculation, which results in a different reading that isn't showing divergences as clearly as I would like. CMF on the other hand has no defined maximum or minimum (similar to MACD) so that it's difficult to determine overbought and oversold values. The MMF is an oscillator with a minimum value of 0 and a maximum value of 100 like RSI. The usage of the average of open, close, high and low as price element makes it less choppy compared to RSI while it still reacts as fast to movements.
https://www.tradingview.com/x/HIjq9tEz/
Release Notes
Version 2.1:- Added multi time frame capability; add an MMF calculated in a higher time frame (shown as background area as default)
The multi timer frame feature allows to show a second MMF calculated in a higher time frame. This allows additional analysis like comparing the values of the two timeframes to detect if a trend is weakening. Divergences detected in the high time frame MMF are powerful signals too.
Open-source script
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in publication is governed by House rules. You can favorite it to use it on a chart.
Disclaimer
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