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Market Facilitation Index (MFI) Indicator

The Market Facilitation Index, created by Dr. Bill Williams, attempts to measure price movement in relation to volume.  The MFI and volume figures are compared to establish four conditions.  "Green" indicates a rise in volume over the previous period and a rise in MFI as well.  "Fade" shows a decrease in volume and MFI compared to the previous bar.  "Fake" indicators a drop in volume but a rise in MFI.  "Squat" means that there has been an increase in volume, but a decrease in MFI.

On a green day, you would want to have an open position in the same direction as the trend.  Fade may indicate a trendless market, but may also be a sign of a market where a trend may be emerging soon.  Fake is a condition to avoid trading in.  This may be a condition where no new outside money is being attracted at this time.  Squat indicates a heavier volume and since MFI does not follow, this may be an indication of a trend reversal.

See Also

Market Facilitation Index (MFI) Developer Help