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  1. #1
    Administrator Martin Kay's Avatar

    Twiggs Money Flow Tool, an indicator based on Chaikenís Money Flow !!!

    Hi guys! Michael post his new review on the Twiggs Money Flow Tool. Very interesting tool, which may be helpfull, but also may not be! The indicator is intended to confirm breakouts and trends, based on extreme spikes, divergences and convergences. Read the full review and give your opinion does this indicator suck or doesn’t suck?

    Originally posted by Michael Hodges. For the full review and download click here.

    What Is Twiggs Money Flow Indicator

    The TMF is yet another price/volume oscillator claiming to have solved the problems faced by other indicators. These problems are the effects of extreme data indicators, their susceptibility to false signals and chart anomalies. The indicator is based on Chaiken’s Money Flow and utilizes volume as a measure of market conviction. It seeks to weed out false signals and smooth the signal line created by CMF. Chaiken’s is based on the Accumulation/Distribution line and simple moving averages. This methodology does not take gaps into account and can provide false signals, especially when extreme data falls out of the sample period.

    My Last Word On Twigg’s Money Flow

    This is an indicator that I will be investigating further. I am not going to start using it but I would like to know more about it and how it is used to generate signals. At this time I think it sucks more than it doesn’t suck but I am not discounting it completely. As a long term indicator I don’t see the use, I have many other tools that are more reliable. As a short term indicator, if I can learn to read it, it may have some use in binary options.

  2. #2
    Legendry Member willyw's Avatar
    Quote Originally Posted by Martin Kay View Post
    Hi guys! Michael post his new review on the Twiggs Money Flow Tool. Very interesting tool, which may be helpfull, but also may not be! The indicator is intended to confirm breakouts and trends, based on extreme spikes, divergences and convergences. Read the full review and give your opinion does this indicator suck or doesnít suck?
    MFI (Money Flow Index), is a very good tool. As you mention it indeed shows divergences but not convergences. Convergences are used mostly in the futures market to determine the futures contract and the spot contract convergence. You can identify peaks and troughs using MFI; when the market is topping or bottoming. MFI using the value of the instrument for calculation, in this case the volume. But in forex we can't obtain the actual volume because the tradingg is spread around globally and is not possble to accumulate the actual volume traded daily worldwide. What the volume some brokers provide is not accurate as the volume is their business transaction only not globally. MFI works best and consider accurate with instruments with actual real volume.

  3. #3
    Legendry Member willyw's Avatar
    Quote Originally Posted by Martin Kay View Post
    Hi guys! Michael post his new review on the Twiggs Money Flow Tool. Very interesting tool, which may be helpfull, but also may not be! The indicator is intended to confirm breakouts and trends, based on extreme spikes, divergences and convergences. Read the full review and give your opinion does this indicator suck or doesnít suck?
    Martin Kay, yesterday I made a comment on your post about Money Flow. Today, I am providing an overview of MFI (Money flow Index) to give you and other members a clearer understanding of MFI and also how MFI is derived.
    The Money Flow Index ("MFI") is a momentum indicator that measures the strength of money flowing in and out of a financial instrument. It is related to the Relative Strength Index, but where the RSI only incorporates prices, the Money Flow Index accounts for volume.
    Interpretation
    The interpretation of the Money Flow Index is as follows:
    ē Look for divergence between the indicator and the price action. If the price trends higher and the MFI trends lower (or vice versa), a reversal may be imminent.
    ē Look for market tops to occur when the MFI is above 80. Look for market bottoms to occur when the MFI is below 20.
    Calculation
    ē The Money Flow Index requires a series of calculations. First, the period's Typical Price = [((high+low+close)/3)] is calculated.
    ē Next, Money Flow (not the Money Flow Index) is calculated by multiplying the period's Typical Price by the volume.
    ē If today's Typical Price is greater than yesterday's Typical Price, it is considered Positive Money Flow. If today's price is less, it is considered Negative Money Flow.
    ē Positive Money Flow is the sum of the Positive Money over the specified number of periods. Negative Money Flow is the sum of the Negative Money over the specified number of periods.
    ē The Money Ratio is then calculated by dividing the Positive Money Flow by the Negative Money Flow.
    ē Finally, the Money Flow Index is calculated using the Money Ratio.

  4. #4
    Solid Member Peter Green's Avatar
    Quote Originally Posted by willyw View Post
    What the volume some brokers provide is not accurate as the volume is their business transaction only not globally. MFI works best and consider accurate with instruments with actual real volume.
    Very interesting! Thank you very much williw for your explanation. I didn’t know before about that indicator. Could you explain in more details how the Money Flow Index is connected to the volume of transactions, probably it is some relative conection?

  5. #5
    Legendry Member willyw's Avatar
    Quote Originally Posted by Peter Green View Post
    Very interesting! Thank you very much williw for your explanation. I didnít know before about that indicator. Could you explain in more details how the Money Flow Index is connected to the volume of transactions, probably it is some relative conection?
    It uses total volume x the typical price, whereareas the volume is the total number of equal buyers and sellers matched, the unmatched which is the balance buyers or sellers not matched is know as open interest which we dont use in forex becoz bankers are not able to track unmatched volume globally. The typical price is the average of high,low and close. The MFI formula must need volume in order to caluculate, without volume the MFI will 0 value. Hope this will help. Any queries pls let me know.

  6. #6
    Legendry Member willyw's Avatar
    Quote Originally Posted by Peter Green View Post
    Very interesting! Thank you very much williw for your explanation. I didnít know before about that indicator. Could you explain in more details how the Money Flow Index is connected to the volume of transactions, probably it is some relative conection?
    Peter Green, regarding about MFI, I am adding some info today. MFI is an indicatorthat measures the money entering into the market and exiting from the market of the given instrument. When MFI climbs above 50, indicating money is entering the market, buyers coming in to buy and when MFI slides below 50, indicating money is exiting from the market, sellers selling their assets of the underlying instrument. When MFI reaches 80 and above, market top is expected, a reversal is soon expected. When MFI drops to 20 and below, market is bottoming out soon, reversal is expected coming soon. When MFI is above 80 or 20, look out for price to MFI divergence. When divergence occurs indicating the current trend is changing.

  7. #7
    Solid Member Peter Green's Avatar
    Thank you, willyw!

    Now I understand it I will search for metatrader original MFI indicator because I am interested on it. If somebody has the link will appreciate very much!

  8. #8
    Legendry Member willyw's Avatar
    Quote Originally Posted by Peter Green View Post
    Thank you, willyw!

    Now I understand it I will search for metatrader original MFI indicator because I am interested on it. If somebody has the link will appreciate very much!
    Just a word of caution! When using MFI in forx might not be as accurate as in other markets because the volume is not correct as in the securities market. There is no way to track the actual volume from all banks, dealers and market markets globally and it's impossible unlike in stocks where all trading are centralized in 1 location, ie the exchange. so the value derived is not accurate. Forex is the only market that doesn't use volume or open interest for analysis.

  9. #9
    Master Member Bogdan G's Avatar
    Quote Originally Posted by willyw View Post
    ...Forex is the only market that doesn't use volume or open interest for analysis...
    ...I know, but I'd want so much an accurate indicator for volume in Forex. Unfortunately, I haven't found one yet and I don't think I will

  10. #10
    Legendry Member Michael Hodges's Avatar
    Quote Originally Posted by Bogdan G View Post
    ...I know, but I'd want so much an accurate indicator for volume in Forex. Unfortunately, I haven't found one yet and I don't think I will
    yeah, I know what you mean, there just isn't a good indicator for volume on forex, but maybe there is a forex fund or etf that we could track and use as a proxy? what do you guys think about that?

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