Money flow is the essence of market price activity. Money involves many crucial emotions and where there is a lot of money, it intensifies. Money flow is a multiplication of a financial instrument’s price and the volume traded in the same period; for instance, if a security’s price is $55.00 and all day the volume was one million shares, money flow equals to $55 million.

Money flow also tracks which way the money flows. Outflow means more stocks sold; the outcome is the security’s price has declined, the calculation is same day's volume X the security price X minus one. The larger the volume then it is most likely that the trend will continue, with the exception that a very large volume can lead to a trend reversal.

Inflow means more stocks bought; the outcome is that the security’s price has advanced and the calculation is: same day's volume X the security price. The larger the volume, then it is most likely that the trend will continue, with the exception that a very large volume can lead to a trend reversal. Because of money flow importance, calculated oscillators and indicators are embedded almost in any technical analysis software.