Money Flow Index (MFI) - profitable options on active money

• VFX Blog
• Strategies

Technical analysis continues to be a reliable option how to make money on binary option. But, in reality, only market volumes move the price, only after the marketers have opened the necessary deals, the strategies begin to work. The Money Flow Index indicator will help you to see where the "active" money will go.

Strategy characteristics

Type: Trend.

Timeframe: Any in the range M1-M5. In our case, M1 is used, but with increasing period of analysis, the accuracy of the signal an increasing.

Trading asset: Any options trading signals. The main requirement is a fixed (2-3 points) spread and no hidden fees.

Trading time: All Forex trading sessions.

Percentage premium option: Not less than 70-75%.

Used indicators

The strategy uses two technical indicators:

• Two Exponential (EMA) Moving Averages with periods of 10 and 30. Determine the direction of the short and medium-term trend.  On a flat with high volatility, you can use the price channel, inside which you can trade (at least 10-15 points wide). A breakdown will become a binary signal of a new trend. This method is recommended only for experienced traders!

EMA (30) are considered as «long» Moving Averages by which the direction of a trend is determined, EMA (10) will be «fast» Moving Average and the first signal for the opening of the option. 

• Money Flow Index (MFI). Shows the dynamics of changes in the volume of "active" money in the market - an increase in "money flow" from buyers or sellers gives rise to the indicator, if open interest decreases, MFI turns down. It works as a confirmation of the binary options free signal from the Moving Average. Read more about the indicator on the blog.

After installing the tools, the terminal's working window looks like this:

Binary options signals:

• CALL (UP) - option.  The fast Moving Average crosses the slow MA from the bottom up. MFI comes out of oversold (above the 20 levels) and moves up.

• PUT (DOWN) - option. Opposite conditions: The fast Moving Average crosses the slow MA from top to bottom. MFI comes out of overbought (below the 80 levels) and moves down.

The movement of the Money Flow Index between levels 40 and 60 confirms a flat in the market. You can open the option on reversals from them, without waiting for exit from overbought/oversold zones. In the live forex trading room, this is recommended only for experienced traders!

Open a trade on the next candle after binary signals. The time of expiration of options has to be not less than 5-7 minutes even if as a working timeframe it is chosen of minute, as in our video.

Recommendations about use …

• You can significantly improve the result of the strategy if you use trading computers with multiple monitors. For example, periods M5-M15 can give a hidden signal about a trend change, which is then confirmed by trade on M1.

• If high tick volumes persist long enough, the MFI indicator tends to "stick" in the extreme zones. Watch out for other indicators and auto binary signals, there may be good entry points during these periods.

• On assets with higher volatility, it is possible to use the modified strategy option in which moving averages as estimated price use HL/2 value. Rules of the opening of options do not change. By this technique the options trading signal from MFI is late, but it only increases the reliability of an entrance!

Summarize… The Money Flow Index shows quite accurately the change in the balance of power between buyers and sellers. Even on tick volumes of the Forex market, the indicator gives a lot of winner binary signals. But, it is impossible to make decisions only on MFI. We need confirmation from trend instruments and oscillators.