The MFI is a measure of the market’s willingness to move the price. I cannot overemphasize the value of this indicator. In his book “Trading Chaos” Bill Williams introduces a new method of combining price and volume in order low platform spread trading forex very see the true market development.
Should the interest of one large group of investors vaporize, the volume drops and from that point efficiency of the market goes down as well. How to interpret BW MFI MFI can be used for all time frames from 5 minutes up to daily and weekly frames. All that’s left to do is to know how to read and interpret different colors given by MFI indicator. MFI bar color Conditions Bar Name by B. Therefore, traders’ best immediate reaction should be to go with the market, whatever direction it is heading. On such green day you would already want to have an open trade in the direction of the market move. If there were any trades left open, make sure they are not going against the market, otherwise they risk to bring losses.
Often this can be observed at the end of a trend. Several brown bars in a row can perfectly illustrate the period where fading excitement is slowly building the base for a new market move. 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. Interesting that nobody has commented on this indicator yet? I have a feeling that this could be a veru useful indicator but I just don’t get it. I’ve resarched this MFI until I’m blue in the face.
I even read a fairly detailed article by Bill Williams himself. Could you add anything that might turn the lightbulb on for me? I understand the indicator, i just don’t really like it. I want to thank you very very much for explaining this important indicator, personnally i want to know more about it, can you advice me some other places where to find more on it, because i see that with more filter indicator this ccould be a support for any decision of a trade. This is not the easiest of indicators to understand. That’s where you’ll hear that following someone’s system doesn’t mean it’ll work for you. The best way to learn about the indicator in depth is to read the original book “Trading Chaos” by Bill Williams, but don’t look for easy answers there, it’s the same complicated description as anywhere you look.
I will try to explain how I use it in conjunction with other trading methods. If you pull up this chart, you will see that thursday’s candle was a doji which formed after somewhat of a downtrend. It also formed right on the weekly pivot and it was also an inside bar or harami if you wish to use candlestick jargon. Thanks for the explanation, Considering that volume indicator reflexes the broker’s trading volume only and not the whole market since it’s not possible, In MFI the volume is essential part of its equation does that mean that MFI accuracy depends on brokers given volume accuracy? The value of this indicator is as a confirmationnot as a signal. 2- It filters out over half of the good trades I would normally do.
OBV when combined with a 3 EMA signal line in the same window. Even so I would never trade without a fast moving ATR to verify volatility because volume does not always equal volatility. I have read the book and believe me, much complicated. Perhaps it works better on futures exchange since exact knowledge of volume and tick volume. Please reply if I am wrong. This indicator can not be used alone, but must be accompanied by other indicators. What should be monitored and the most important of these indicators are green and pink, others simply viewed with a skeptic attitude.
Please reading the book Trading Chaos carefully. This was very frustrating initially, but eventually will be very useful to know the end of a trend. Volume and tick volume is another thing, this is a different matter from MFI. I am a FMI indicator fan but it has to be used with other complementary indicators such HI-LOW of a FMI green bar less than 1. 5ATR for the that time bar, an ADX less than 26 and a well defined trend. With that, you will have a bunch of winning transactions if you accept a 1:1 winning ratio on each transaction. Obviously you need to have a good understanding of the basics of Forex first to enable you to interpret the MFI.
MFI, can really make money with it. However, many traders not really understand the main explaination in the book BW Chaos Trading. That’s why BW said the application is for advance trader. The MFI bar size shows price action similar to the volume indicator showing volume action. Compare this indicator with the volume indicator from the navigator menu in MT4. You will find that you can only get MFI green and pink bars in line with volume green bars.
Also MFI blue and brown bars line up with red bars on the volume indicator. As The height of each volume bar is compared with it’s previous bar it gets colored red for lower and green for higher. The MFI compares price movements with each previous bar and considers volume in it’s color scheme. It’s nothing more than a volume like indicator for price movement that includes volume action in it’s color coding. Now all we need is to do chart the volume and histogram the price action with the MFI! Another possible indicator made from the MFI could be to have bull bars print above the zero line and have bear bars print below the zero line.
What implications this would have I don’t know but it would be fun to experiment with. I’ve been having problems with this indicator when a giant blue fake bar appears. These usually single giant bars squish the rest of the data into the zero line making the MFI unreadable until there are enough time periods to get rid of them. Is there any MFI alternative out there that can remove these things? I’d rather see a shorter white bar or a short fat blue bar in it’s place to note it’s presence. All others ae blacked out on the color selection.
I wait for 2 consecutive green lines to appear. This gives me the trend,I go off the last bar traded. Usually you can get into the trend in it’s earlier stage. Please read the chapter “Using fractals and leverage” from Trading Chaos by Bill Williams carefully, I think then you will be able to appreciate the usefulness of the indicator. Fractals, MFI and other Bill Williams indicators are perhaps the best indicators available. Take my suggestion and put your mind on this strategy, you wont regret. Part 1: What Is Forex Trading ?