this concept is a bit different from or CMF . The math we use here is simpler, and more "relative" and short-term focused, deliberately.
how does it work
once the average price change and the average volumes are calculated for the specified length, we then turn that into a +100/-100 oscillator format - using the () function - which helps to generate a clearly identifiable unambiguous signal (crossing the zero line up or down) that help traders (mainly with entries)
-- the () function also makes the oscillator "relative" to the specified period length, meaning, we can be in a uptrend (demand mode) and the MFO is showing flow "out" (negative) - that's specific to the short-term period - and that's exactly what i was trying to see
- the thinking here is that the best spot to go long is when the existing selling has been depleted and no more supply exists (during an uptrend), and vice verca.
- other stuff: i use () throughout the script -- and we apply a smoothing for the final plot. keep smoothing to a minimum to avoid unnecessary lag in the signals
- the signal should be considered *after* a bar is fully closed.
i suggest you use this in combination with other indicators that can show the overall short-term and long-term bias (for example, i use the Ribbon here for that) - and take only entry signals in the same direction - a signal to go long, for example, would be when the bias / trend is up *and* the MFO crosses the zero line *going up* .. you may need to wait for that setup to show before you hit the trigger.
another benefit here, is that MFO will also detect strengths and weaknesses - when we see diversion with price movement. this shows couple of times in the example below
i do not do short-term trading / scalping - those who do, i hope may find this useful - if you decide to use it and you do find it useful, please post feedback here for the common learning
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.