Money flow index is an oscillator indicator.
Being an oscillator indicator indicator,Money flow index was created by Gene Quong and Avrum Soundack with the main objective of helping traders to know whether the market is in an overbought or oversold condition.As an oscillator indicator,money flow index uses both price and volume to measure the buying and selling preasure of a given cryptocurrency.Just like other oscillator indicators like the RSI,Money flow index has an oscillation ranging from 0 to 100. In its oscillation range,two key points are important,below 20 and above 80 point. Because of this,it is considered to be similar to RSI except the fact that in Money Flow Index,volume is considered to be very important while in RSI volume is not considered to be very important.
According to Gene Quong and Avrum Soundack,the values of money flow index is gotten using the formula from below

MFI=100-(100)/(1+MR)
Where
MR is money ratio given as;
MR=positive money flow/negative money flow.

 

1.Oversold cryptocurrency Money Flow Index(MFI)

Therefore,since money flow index is an oscillation ranging from 0 to 100 and oscillation points at 20 and to 80,it therefore works on the basis of oversold and overbought. For oversold ,when the money flow index falls below 20,that will be an indication of an oversold market condition thus signalling the cryptocurrency trader to purchase a given amount of cryptocurrency with their USDT balance in their account.The cryptocurrency trader can either place a market buy order which will instantly be executed or they can place a limit buy order which will be executed when the market price reaches their limit order price.This is indicated as from the candlesticks chart below;

MFI

The above market represents the TRX market against USDT.
In the TRX/USDT above,two points are being indicated. There is point A and point B. Point A represents the Money flow index while point B represents the oversold market condition.At point B,the money flow index falls below 20 thus an indication of an oversold market condition over there.This signals the cryptocurrency trader to buy a given amount of TRX with their USDT balance. The cryptocurrency trader can place a market buy order which will instantly be executed or they can place a limit buy order which will be executed when the  market price reaches their limit buy order price.When their order is being executed ,their cryptocurrency account will start appreciating in value in terms of USDT if the price starts moving upward.

2.Overbought Cryptocurrency Money Flow Index(MFI)

Therefore,since money flow index is an oscillation ranging from 0 to 100 and oscillation points at 20 and to 80,it therefore works on the basis of oversold and overbought. For overbought,when the money flow index rises above 80,that will be an indication of an overbought market condition thus signalling the cryptocurrency trader to sell a given amount of cryptocurrency which he had previously purchased and is currently holding to prevent their account from depreciating in value. The cryptocurrency trader can either place a market sell order which will instantly be executed or they can place a limit sell order which will be executed when the market price reaches their sell limit order. When their order is being executed,their account will increase in value in terms of 
USDT.This is indicated as from the candlesticks chart below

 
MFI

The above market represents the TRX market against USDT.
In the TRX/USDT above,two points are being indicated. There is point A and point B. Point A represents the Money flow index while point B represents the overbought market condition.At point B,the money flow index rises above 80 thus an indication of an overbought market condition over there.This signals the cryptocurrency trader to sell a given amount of TRX which he had previously purchased and is currently holding to prevent their account from decreasing in value.The cryptocurrency trader can either place a market sell order which will instantly be executed or they can place a limit sell order which will be executed when the market reaches their sell limit order price.When their order is being executed,their trading account will have appreciated in value.

 

Recommendation: Cryptocurrency market is a highly volatile market. As a cryptocurrency trader,whenever you place your buy order,always make sure to apply risk management so that whenever the market goes against you,your account do not decrease in value so much

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