MFI Custom indicator
- Indicatori
- Ebuka Francis Obiakor
- Versione: 1.0
Modified Market Facilitation Index with Volume Average
Description:
This indicator is an enhanced version of the classic Market Facilitation Index (MFI) that provides more stable and reliable market condition signals by using a volume average comparison instead of single-bar comparison. An invaluable tool for your trading arsenal.
What is Market Facilitation Index?
The MFI measures the efficiency of price movement by calculating how much price moves per unit of volume. It helps traders identify the market's willingness to move price and detect potential trend changes or continuations.
Key Enhancement:
Unlike the original MFI which compares the current bar's volume to only the previous bar, this modified version compares it against the average volume of the previous X bars. This provides:
- Smoother, more reliable signals
- Reduced false signals from volume spikes
- Better identification of true market conditions
- More stable color coding patterns
How It Works:
The indicator calculates MFI = (High - Low) / Tick Volume for each bar, then assigns colors based on two factors:
- MFI Direction: Comparing current MFI to previous bar's MFI
- Volume Status: Comparing current volume to the average of previous X bars
Four Market Conditions (Color-Coded):
🟢 Green (Both Up) - MFI increasing + Volume above average
- Market is trending strongly with good participation
- Best condition for trend continuation
🔵 Fade (Both Down) - MFI decreasing + Volume below average
- Market losing momentum and participation
- Potential exhaustion or consolidation
🟠 Fake (MFI Up, Volume Down) - MFI increasing + Volume below average
- Price moving but without strong volume support
- Potential false breakout or weak move
🟡 Squat (MFI Down, Volume Up) - MFI decreasing + Volume above average
- High volume but price not moving efficiently
- Often indicates preparation for a strong move or reversal
Customizable Parameters:
- Period: Number of previous bars for volume average calculation (default: 10)
- MA Method: Type of moving average (SMA, EMA, SMMA, LWMA)
- Colors: Fully customizable colors for each market condition
- Width: Adjustable histogram bar thickness
- Decimals: Values displayed with 2 decimal precision
Usage Tips:
- Green bars in an uptrend confirm strong buying pressure
- Squat bars often precede significant price movements
- Fake bars warn of potential reversal or weak momentum
- Use in combination with price action and other indicators
- Adjust the Period parameter based on your timeframe and trading style
Suggestion:
- Consider using same color bars for Green and Squat bars (Volume up) and same color bars for Fade and Fake bars (Volume down)
Compatibility:
- MetaTrader 5
- All instruments and timeframes
- Minimal system resources
Feel free to share feedback and suggestions!
