I tested the money flow index indicator 200 times.
Actually, that’s not completely true.
I tried my hardest to test this indicator 200 times!
Because this indicator is not just an indicator.
It’s a patience-testing machine where you will suffer and get old!
You see, the name of the indicator is the Money Flow Index.
Naturally, you would think that money will flow into your account.
But while testing it, I realized the only thing flowing was time away from my life!
You know how most indicators give an entry point like a crossover, and then you take a trade?
Well, that doesn’t happen with this indicator.
Imagine the shyest, most introverted person you know, then multiply that by 100 times, and you will get this Money Flow Index indicator.
You see, the indicator is RSI’s weird cousin who is obsessed with volume!
It looks at the price movement and then the volume to check if the price is overbought or oversold.
That sounds really simple and logical, but as you are about to see, this indicator has some serious commitment issues.
You see, in the mostly good market, I have tested this indicator before.
It got around a 42% win rate!
Since the reward-risk ratio was 1.5 to 1, the breakeven win rate was 40%.
So, this 42% win rate managed to make a profit.
But that profit was tiny.
You can even say that the win rate is around the breakeven point.
Naturally, as one does after testing hundreds of strategies and going crazy, I wanted to see how high the win rate of this money flow goes if I take trades in an extremely good market.
And how badly can this indicator suck if I take another hundred trades in the extremely bad market?
Can it beat the highest win rate we have seen in the extremely good market, or will it suck completely?
Well, to find out, I went to the Gold/USD one-day time frame and added a 9-period EMA to the chart.
If the price was clearly above this 9 EMA, I saw it as a good trending market and took 100 trades in it for the extremely good market test.

When the price was choppy, ranging, or not trending clearly above the 9 EMA, I drew red boxes and saw this price movement as extremely bad for the trend-trading strategy.
This is where I did the extremely bad market test.
Since the Gold/USD has been moving in an excellent uptrend for a while on the one-day time frame, I only took long trades on it.
But the one-day time frame was just to filter the good and bad market.
My entry time frame was 30 minutes, where I took trades with this Money Flow Index indicator.
Also, fun fact: on many trading platforms, this indicator comes with 80 and 20 as the overbought and oversold values.
But the creator of this indicator recommended using the 90 and 10 values instead because those extremes are rare.
When the price moves above the 90 Money Flow Index level, there is a high chance the price is overextended in the upward direction or is overbought and now has a higher probability of moving in the downward direction.
Similarly, if the money flow value goes below the 10 level, it is a rare scenario where the price is overextended in the downward direction or is oversold and now has a higher probability of moving in the upward direction.
When the money flow line moves back above the 10 value, people like to buy at the closing price of the candle.
Something like this.
The stop-loss goes below the swing low or where the price reversed from.
Like this.
I set the profit target at 1.5 times the stop-loss distance or used a 1.5-to-1 reward-risk ratio.
I started testing with the extremely good market first.
And this is where the problem started.
In most other strategies I have tested, I was able to find trades pretty quickly.
With this indicator, I waited and waited and waited for the money flow value to go below the 10 level.
The world changed, but this indicator barely gave any entry points.

You see, when I tested this indicator in the previous good market test, I was able to find 100 trades because the price was not strongly trending in one direction.
But in this extremely good market test, since the price is moving strongly in one direction, a big pullback or a big opposite move rarely happened.
The price needs to make a big opposite move for the Money Flow Index value to go below the 10 level.
This was so rare that I ran out of data to test.
I went back as far as 20 years but didn’t even find 100 trades with this indicator in the extremely good market.
At the end, I was only able to find 37 trades.
Now, even though the win rate at this point was a high 67%, I can’t use this data or compare it with other indicators we have tested so far.
That’s just not enough trades!
The profit graph was moving nicely in the upward direction.
But this indicator just doesn’t give trades frequently enough in the good market.
So, I took 100 trades in the extremely bad market.

This time, I was able to find trades.
The slow market has a lot of up-and-down movement.
Because of this, the indicator was giving entry points pretty frequently.
However, the quality of the trades was not that good.
The profit graph started to move in the downward direction pretty much from the start.
It lost 9 trades in a row and only won 5 trades in a row.
After 100 trades, it got a 35% win rate.
Since the breakeven win rate is 40% with the 1.5-to-1 reward-risk ratio.
This 35% win rate completely sucks.
The profit graph looks like it’s moving in a downtrend, and you will probably blow up your account if you keep trading with it in the ranging or slow market.
But how well does it perform compared to other indicators?

Well, let’s find out by giving it a TR score, or the Trading Rush score.
In the previous mostly good market test, the Money Flow Index had a 4.2 out of 10 score in the win rate category, and 7.5 out of 10 score in the easy-to-use category.

In the extremely good market test, I gave it the same 7.5 out of 10 score in the easy-to-use category, but I gave it a 0 out of 10 in the win rate, reliability, consistency of profit, and quality of trades category.
That’s because you will have a much higher probability of making money by taking trades every time your neighbor’s dog barks than with this indicator.
You will become old by the time the Money Flow Index starts flowing money into your account!
In the extremely good market, you are better off with other trading strategies that give higher-quality setups more frequently than this garbage.
That brings the TR score to 7.5 in the good market, which is really low compared to other strategies we have tested so far in the same market structure.
In the extremely bad market, since it got a 35% win rate, it gets a 3.5 out of 10 score in the win rate category.
It gets 3.5 in the reliability and quality of trades categories as well.
Since it didn’t make money, it gets a zero out of 10 in the consistency of profit category.
The easy to use score… stays the same at 7.5 out of 10.
That brings the TR score to 18, which is not the lowest score we have seen so far, because there were strategies that sucked even more.
In the mostly good market, its TR score was 23.2, higher than the extremely good market and the extremely bad market.
You can say that this Money Flow Index barely gives any money in the mostly good market conditions with its near-breakeven win rate.
It doesn’t even remember what money is in the extremely good market.
It straight up doesn’t give enough trades.
And in the extremely bad market, it actually flows money OUT of your account.
There is no good reason to use this Money Flow Index indicator.
But let’s see if we will find an indicator that will be really useful in both extremely good and extremely bad markets.
Thanks for watching!