I just noticed that many people still don’t really understand the Money Flow Index. Although it is a very important indicator for trading all types of assets, I’d like to share clearer knowledge about this indicator today.

Money Flow Index, also known as the Cash Flow Index (ดัชนีกระแสเงินสด), is a tool that helps us see the actual buying and selling pressure in the market—not just by watching prices, but by observing how much money flows into and out of the market. If the Money Flow Index rises, it means a lot of money is coming in to buy. If it falls, it means there is selling pressure going out. This is an important signal that helps us make better decisions.

Reading the Money Flow Index is quite straightforward. When the value is above 80, it indicates the market is in an Overbought condition, meaning there is strong buying pressure. During this phase, the price may pause. So be careful before adding more purchases. On the other hand, if the Money Flow Index is below 20, that indicates an Oversold condition—strong selling pressure. But it could also be a buying opportunity if you’re confident in the long-term trend of that asset.

What people often get confused about is the difference between the Money Flow Index and RSI. Both are indicators of buying and selling pressure, but they use different ways of thinking. RSI only looks at the average up-and-down movement of prices, while the Money Flow Index looks at the amount of money flowing in and out. That means the Money Flow Index can help you understand the market more deeply, because sometimes prices rise but money doesn’t come in—or prices fall but money doesn’t flow out as much. The Money Flow Index can detect these signals better.

Talking about how to calculate the Money Flow Index may sound complicated, but the principle is simple: take the highest, lowest, and closing prices, add them up, then divide by three. Take the resulting value and multiply it by the volume compared with the previous day. If today’s Typical Price is higher than yesterday’s, that is a Positive Money Flow; if it’s lower, that is a Negative Money Flow. Finally, divide the Positive Money Flow by the Negative Money Flow, substitute it into the formula Money Flow Index = 100 - (100 / (1 + Money Ratio)), and you’ll get the value you need. Most trading platforms calculate it for us automatically, but it’s better to know the principle.

In real use, you shouldn’t rely on the Money Flow Index alone. You should look at it together with other indicators, such as Moving Average or MACD, to make the signals stronger. Also, remember that the Money Flow Index is good for analyzing the medium to long term, but for day trading it may not be as accurate.

The advantage of the Money Flow Index is that it helps us see the actual buying and selling pressure, making it possible to build strategies with higher profit potential, and it’s also easy to use—so it’s suitable for beginners. The downside is that sometimes it may produce false signals, especially in markets with high volatility. Therefore, you need to combine it with other analysis.

Overall, the Money Flow Index is a good tool for reading the market. It helps us better understand the behavior of money. If you’re interested in learning more or want to try analyzing different assets, I recommend going to Gate to check the charts and various indicators. It’s a platform with fairly comprehensive analysis tools.