Guide · Volume & money flow
Does Money Flow Index work?
Across 375 stocks, Money Flow Index cut the worst fall on 94%, beat buying and holding on risk-adjusted return on 14% and on raw return on 13%. Mainly a seatbelt: it softened the big falls on most stocks, but usually gave up return to do it.
What it predicts
RSI with volume added. Buy when it climbs out of oversold (20), sell when it drops out of overbought (80).
- In when the 14-day MFI crosses up through 20.
- Out when it crosses down through 80.
Volume & money flow plays bet that volume shows conviction. The family guide
How to use it
- It sits in cash much of the time (holding on about 38% of days), so judge it on risk-adjusted return rather than on matching a rising market.
- It worked best on Micro caps (50% beat holding on risk-adjusted return) and worst on Big tech (0%).
- Use it as one input. Your signal combines the plays you count with the other factors you weight into one call.
When it worked
Money Flow Index did best against holding in the COVID drop (+15% median gap) and worst in the 2020–21 rally (−26%). Median gap in return against holding the same stock (per year over stretches longer than 18 months; crypto excluded).
| 2008 crash | Recovery 2009–19 | COVID drop | 2020–21 rally | 2022 bear | Since Oct 2022 | |
|---|---|---|---|---|---|---|
| Money Flow Index | +13% | −10% | +15% | −26% | +9% | −7% |
Where it worked
By kind of stock: how often it beat holding on risk-adjusted return, and the median Sharpe ratio gap.
| Group | Beat holding, risk-adjusted | Sharpe gap |
|---|---|---|
| Micro caps | 50% | +0.07 |
| Industrials & rentals | 44% | -0.03 |
| Real estate | 32% | -0.20 |
| Consumer & retail | 18% | -0.20 |
| Metals & mining | 18% | -0.17 |
| Industrials & materials | 14% | -0.15 |
| Software & devices | 12% | -0.30 |
| Energy & power | 10% | -0.18 |
| Media & telecom | 10% | -0.17 |
| Semiconductors | 9% | -0.30 |
| Financials | 8% | -0.20 |
| Healthcare | 6% | -0.10 |
| Sectors | 0% | -0.16 |
| Indexes & ETFs | 0% | -0.25 |
| Big tech | 0% | -0.39 |
Where it helped most
Sharpe ratio gap against holding, stocks with 3+ years of history
Right now
Money Flow Index holds 173 of 377 names as of the Oct 13, 2026 close.
Changed its call in the last two weeks:
Backtest results since 2005 (or as long as each stock has traded), against holding the same stock over the same dates, after 0.05% per switch. Past results don't promise future ones. This analysis does not constitute trading advice. Please meet with an advisor or independently review sources before making any decision.