MetaStock Indicator - Market Facilitation Index

The Future of Investing

Indicators
Examples and interpretation of many commonly used indicators.

Custom Formulas
Custom explorations, indicators and trading systems.

Price Charts
Examples and interpretation of all charts used in technical analysis.

rev. 01/06/97

The following formulas were constructed using interpretation from Technical Analysis of Stocks & Commodities Magazine June 1994, article "The Market Facilitation Index", by Gary Hoover.

Taken from Stocks & Commodities, V. 12:6 (253-254): The Market Facilitation Index by Gary Hoover

"Applying technical analysis to developing trading signals begins with the investigation of price movement and often incorporates volume studies to improve trading accuracy. The Market Facilitation Index (MFI) is one indicator that synthesizes both price and volume analysis. The MFI is the ratio of the current bar's range (high-low) to the bar's volume.

The MFI is designed to gauge the efficiency of price movement. The efficiency is measured by comparing the current bar's MFI value to the previous bar's MFI value. If the MFI increased, then the market is facilitating trade and is more efficient, implying that the market is trending. If the MFI decreased, then the market is becoming less efficient, which may indicate a trading range is developing that may be a trend reversal…."

Range:
High-Low

MFI:
Fml("Range") / Volume

Efficiency:
If(Fml("MFI"),>,Ref(Fml("MFI"),-1),1, If(Fml("MFI"),<,Ref(Fml("MFI"),-1),-1, If(Fml("MFI"),=,Ref(Fml("MFI"),-1),0,0)))

Where:
+1 = increase
-1 = decrease
0 = unchanged

Market Facilitation Comparison:
If(V,>,Ref(V,-1),If(Fml("MFI"),>,Ref(Fml("MFI"),-1) ,1,If(Fml("MFI"),<,Ref(Fml("MFI"),-1),2,0)),If(V,< ,Ref(V,-1),If(Fml("MFI"),>,Ref(Fml("MFI"),-1),3,If( Fml("MFI"),<,Ref(Fml("MFI"),-1),4,0)),0))

Where:
1 = +,+
2 = +,-
3 = -,+
4 = -,-