Money Flow

Sometimes investors just wanna go with the flow. But how do they know where the flow goes? You can get the money flow by taking the average of a stock’s highest price, lowest price, and closing price in a given day, and multiply that by the volume (which means the number of trades).

To figure out where dat flow go, just compare a money flow figure to money flow figures for previous days. If the money flow is positive, prices might move up. But if the money flow is negative, prices might fall. This is because a positive money flow means that stock is being purchased at a higher price—and uptick—and a negative money flow means a stock is purchased at a lower price than before—a downtick.

The money flow is nice since it takes into account multiple figures, weights them by volume, and pops out one number that investors can use to compare to other figures calculated the same way. However, the money flow calculation can’t predict the future. Still, it shows investors which way certain stocks are trending on the market, which could help them find windows of opportunity to jump in on.