Market facilitation index: Market Facilitation Index Definition NAGA Learn Glossary

mfi and volume

If any group of participants is declining or growing in commercial interest, this fact is immediately reflected in the productivity of the market. The Market Facilitation Index is one of those proposed by Bill Williams. In this article, we have looked at how it works and how it is calculated. However, as we have shown, it is a relatively difficult to use indicator. Open Level Up Bonus account in web or mobile version of FBS Personal Area and get up to $140 free to your account.

The only thing that you can tweak in the indicator is the colour of the bars. First, you just need to subtract the low level and high level of an asset in a certain period. You should then take this figure and divide it with the volume. The Market Facilitation Index is one of the several indicators that were developed by Bill Williams. His other indicators are the alligator, awesome oscillator, fractals, and gator oscillators. These indicators are provided by most trading platforms like the MT4 and MT5 and TradingView (but not on PPro8™).

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The increase in volume suggests that money enters the market. An increase in MFIs implies an acceleration in price movement. In such circumstances, Williams recommended going in the direction of the market. Not surprisingly, the default color for this combination is the green bar in the MT4 MFI indicator. Inexperienced traders are not recommended to open deals when a pink bar appears. If the volume starts to grow on subsequent bars and a green bar appears on the BW MFI histogram, you can open the transaction in the direction of the current price movement.

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However, in reality, it is one of the hardest indicators to use. In fact, it is a relatively difficult thing to find trading signals using the indicator. Therefore, we recommend that you focus on other indicators like the RSI and moving averages. The market facilitation index indicator was designed to take simple aspects of market action – changing the price and volume of ticks and translating them into clear and concise terms.


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How the MFI indicator is calculated

The default color for attenuation in MT4 is a brown stripe. It is not important for the MFI indicator how much the previous volume has decreased − by 1 tick or 100 ticks − it will «draw» a green bar in any case. It means that the number of the transactions made by traders increases and happens the active movement of the market in the direction of a trend. New players add the volumes to the market in hope for continuation of a tendency. Change of market volume begins much earlier, than the new trend will become obviously visible on a price chart. The indicator calculates how many points have changed the price for tick − it is and there is a reaction of the real players to the dynamics of the volume.


To calculate Market Facilitation Index you need to subtract the lowest bar price from the highest bar price and divide it by the volume. You may want to test the environment with virtual money with a Demo account. Once you are ready, enter the real market and trade to succeed. Calculating the market facilitation index is frankly simple.

Indicator BW MFI has a special, rather complex philosophy. This is an excellent tool for assessing the seller/buyer balance, its effectiveness is virtually doesn’t depend on the type of the trading asset and the analysis period. The link to the current volatility allows you to make an assessment as objectively as possible. After the appearance of the «squatting bar», you need to set the postponed warrants of SellStop and BuyStop 2-5 points below/above the boundaries of the last closed candle. There is a high probability of speculation or currency interventions. Before finding out the reasons for such strange behavior of the price, it is recommended to abandon new trades.

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Each color has a specific meaning and shows how the market responds to a change in volume. The Market Facilitation Index is the creation of Bill Williams. The indicator endeavors to establish the effectiveness of price movement by computing the price movement per volume unit. This is accomplished by subtracting the day’s low from the high and dividing the result by the total volume.

Further, there is a period when the MFI is rising while the volume is falling. This situation is known as fake and is a sign that price moves should be taken with a grain of salt. The same is true when the MFI is falling while volume is rising. In the end, he settled on the currently well-known designation of the market facilitation index , but it remains just a measure of the range in volume. This value, depending on the asset, is usually multiplied by 1,000 or 10,000 to obtain a value that is easier to see. Although it is true, everything is said, that the important thing about this indicator, as we will see now, is not the absolute values.

These terms, as we have seen, give an idea of ​​what the market is doing and what it is going to do next. Most technical analysts will agree that volume change is the key signal we should look for. The MFI indicator gives an idea of ​​how the market reacts to changes in volume. Looking at how the MFI indicator compares with the previous bar, combined with how the volume has changed compared to the previous bar, you can get a better picture of what is happening. The market facilitation index indicator looks at two things, price and volume. Bill Williams argued that increasing or decreasing volume tells you a lot and that we should be interested in how the market reacts to volume changes.

If you are looking to trade forex online, you will need an account with a forex broker. If you are looking for some inspiration, please feel free to browse my best forex brokers. I have spent many years testing and reviewing forex brokers. IC Markets are my top choice as I find they have tight spreads, low commission fees, quick execution speeds and excellent customer support. Its creator, Bill Williams, considers it to be a very important indicator, but uses it integrated into his trading system. In any case, it is vitally important to know that the important thing is not the absolute values ​​of the indicator.

Like many other technical indicators, it’s not the best option to make trades on the basis of MFI alone. Bill Williams advised combining MFI with Fractals and other indicators, for example, Alligator or Moving Average. As an indicator on its own the MFI is of no significant value.

However, trading platforms, such as the one mentioned above, show their calculation automatically. In this sense, knowing how it is calculated will help us to interpret it later. Has plenty of features such as Lot/Risk Management, Filtering trades and Reverse Trading, Lifetime Support. Forex historical data is a must for back testing and trading. Forex data can be compared to fuel and software that uses this data is like an engine.

It reflects an increase of trading interest and an active fight between buyers and sellers. After one of the sides wins, the price will likely make a big move breaking support or resistance levels. The MFI, however, can’t be used to determine the direction of the breakout. One more scheme of the Market Facilitation Index and Volume indicators usage. We will configure MFI so that only the sharp growth of volume will be displayed.

Nonetheless, if the current price candle’s MFI and volume are compared to the previous candle’s MFI and volume, the index starts to have some significant tradable data. Self-confessed Forex Geek spending my days researching and testing everything forex related. I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more. I share my knowledge with you for free to help you learn more about the crazy world of forex trading!

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