Range divided by volume, measuring how far one unit of volume moves price — the efficiency of price discovery. Bill Williams' four-quadrant read of the quality of participation.
The Market Facilitation Index (BW MFI) was introduced by Bill Williams — a trader and psychologist — in his book Trading Chaos.
As the name suggests, it measures how readily the market is facilitating price movement.
It is usually written as BW MFI to distinguish it from Welles Wilder's Money Flow Index (MFI), an entirely different indicator. The two share initials but nothing else, and should never be confused.
The idea fits in a single line: divide the bar's range by its volume. In other words, how far did price travel per unit of volume? Williams called this the efficiency of the market.
A large move on thin volume is highly efficient. A wide flood of volume that produces no range is highly inefficient.
How to Read
NASDAQ:AAPL
Williams' essential question was not about price, and not about volume, but about the ratio between them. He believed the quality of the crowd's intent was hidden in that relationship.
Members Only
Full access is reserved for members of the library.