Discussing the article: "MQL5 Wizard Techniques you should know (Part 53): Market Facilitation Index"
Thanks for the MFI insight. I will revisit and test again. What was the your Risk Reward ratio in testing this strategy?
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//+------------------------------------------------------------------+ //| Check for Pattern 4. | //+------------------------------------------------------------------+ bool CSignalMFI::IsPattern_4(ENUM_POSITION_TYPE T) { if(T == POSITION_TYPE_BUY && Low(X()+1) > Low(X()) && MFI(X()+1) > MFI(X())) { return(true); } else if(T == POSITION_TYPE_SELL && High(X()+1) < High(X()) && MFI(X()+1) > MFI(X())) { return(true); } return(false); }Seems that the highlighted
MFI(X()+1) > MFI(X() is questionable (especailly compare to other Patterns' algorithm)!!
Could one of them be:
MFI(X()+1) < MFI(X()
Regarding the following:
Seems that the highlighted
is questionable (especailly compare to other Patterns' algorithm)!!
Could one of them be:
MFI(X()+1) < MFI(X() The author wants to say for the condition to be valid, the previous MFI should be greater than the current MFI in both cases.
MFI(X()+1) > MFI(X() In such a case, he is measuring;
decreasing MFI strength but increasing lower low in bearish trend
MFI(X()+1) > MFI(X() && Low(X()+1) > Low(X())
decreasing MFI strength but increasing higher high in bullish trend .
MFI(X()+1) > MFI(X() && High(X()+1) < High(X())Hope this helps.
The author wants to say for the condition to be valid, the previous MFI should be greater than the current MFI in both cases.
In such a case, he is measuring;
decreasing MFI strength but increasing lower low in bearish trend
decreasing MFI strength but increasing higher high in bullish trend .
Hope this helps.Thank you for explaining.
Yes, it makes sense.
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Check out the new article: MQL5 Wizard Techniques you should know (Part 53): Market Facilitation Index.
The Market Facilitation Index is another Bill Williams Indicator that is intended to measure the efficiency of price movement in tandem with volume. As always, we look at the various patterns of this indicator within the confines of a wizard assembly signal class, and present a variety of test reports and analyses for the various patterns.
The Market Facilitation Index (MFI) reflects the market's ability to make price changes within a set timeframe. Perhaps to better set the stage, it may be useful to contrast it with another Bill Williams Indicator we covered in the last article, the Awesome Oscillator (AO). If we start with focus/ purpose, AO tracks momentum via a comparison between 34 period and 5 period median price averages, with the thesis that larger magnitude changes represent huge momentum shifts and vice versa. MFI on the other hand dwells on the efficiency of price movement relative to volume, or it seeks to answer the question if trade volume was x amount by how much will price respond vs if it was y amount.
The AO uses the zero line context to interpret the type of momentum in play. In fact, all Bill Williams indicators covered so far are zero-line dependent, however the MFI does not. It generates absolute values based on price range and volume, which necessitates direct comparison of changes in the MFI. Use cases are also slightly different because MFI as mentioned is suited for understanding market efficiency and volume dynamics, especially when paired with other indicators and seeking confirmation of breakouts. AO, on the other hand, is ideal for use in trend following strategies since it helps in pinpointing fractals or shifts in momentum.
Where:
While the MFI itself, does provide an indicator value, its use/ significance stems from tracking its changes in different market/ volatility conditions. As a positive only histogram Oscillator, it does provide a number of key colours worth mentioning.
Author: Stephen Njuki