Twiggs Money Flow is an indicator by Colin Twiggs, which uses Welles Wilder's Moving Average.
It has one configurable parameter:
- Period - calculation period.
Calculations:
TMF = WMA(ADV) / WMA(Volume)
where:
WMA - Wilder's Smoothing Average with the smoothing average k = 1/Period ADV = Volume * (2*Close - TRL - TRH) / TR TRH = Maximum(High, PrevClose) TRL = Minimum(Low, PrevClose) TR = TRH-TRL
Interpretation:
- Positive values of Twiggs Money Flow point to a bullish trend in the market, negative values indicate a bearish trend.
- The greater the oscillator value (above or below zero), the stronger the signal.
- Long position entry is performed when the resistance line is broken upwards and Twiggs Money Flow is above zero.
- Short position entry is performed when the support line is broken downwards and Twiggs Money Flow is above zero.
- The divergence of the oscillator line and the price also provides good signals:
- Long position entry at a bullish divergence.
- Short position entry at a bearish divergence.
