Volume Flow Indicator Performance by Markos Katsanos
Find out how well the volume flow indicator performs in this, the
second of a two-part series on the VFI.
Last month, I introduced a long-term money
flow indicator I call the volume flow indicator
(VFI). The VFI is based on the on-balance
volume† (OBV), but with three important
• Positive readings indicate a bullish state and negative
readings a bearish state.
• The calculation is based on the day’s median instead
of the closing price.
• A threshold was introduced to take into account
minimal price changes and another threshold to
eliminate excessive volume.
To assess the efficacy of the new indicator and whether the
modifications added any value, I tested VFI against OBV, the
buy and hold method, and a price-based indicator. In order to
evaluate the new indicator’s properties, I conducted tests
using divergence, direction, and indicator level signals separately.
The same tests were repeated substituting VFI with
OBV and a price-based indicator.