OPEN-SOURCE SCRIPT
Inflow/Outflow Index (IOI)
The Inflow/Outflow Index (IOI) is a high-sensitivity momentum oscillator designed to visualize the tug-of-war between aggressive buying and selling. Unlike a standard RSI (which only tracks price change) the IOI scales price action by actual traded volume, providing a clearer picture of where the "Smart Money" is moving.
- Buying Inflow: Occurs when the price closes higher than it opened, weighted by the volume of that period.
- Selling Outflow: Occurs when the price closes lower than it opened, weighted by volume.
These flows are then smoothed using an Exponential Moving Average (EMA) and processed through an RSI-style formula to create an oscillator that moves between 0 and 100.
How one reads this indicator:
The Midline (50): The "Control Point" where the tug of war is in a state of balance / indecision.
- Above 50 (Green By Default): Buyers are in command, and capital is flowing into the asset.
- Below 50 (Red By Default): Sellers are dominating, and capital is flowing out of the asset.
- Extreme Inflow (>80): Signal of intense buying pressure; the trend is strong but watch for exhaustion.
- Extreme Outflow (<20): Signal of heavy liquidation; potential for a "oversold" bounce.
- Divergences: If the price makes a new high but the IOI makes a lower high, it suggests the move lacks the "volume fuel" to continue, signaling a potential reversal.
Godspeed friends!
- Buying Inflow: Occurs when the price closes higher than it opened, weighted by the volume of that period.
- Selling Outflow: Occurs when the price closes lower than it opened, weighted by volume.
These flows are then smoothed using an Exponential Moving Average (EMA) and processed through an RSI-style formula to create an oscillator that moves between 0 and 100.
How one reads this indicator:
The Midline (50): The "Control Point" where the tug of war is in a state of balance / indecision.
- Above 50 (Green By Default): Buyers are in command, and capital is flowing into the asset.
- Below 50 (Red By Default): Sellers are dominating, and capital is flowing out of the asset.
- Extreme Inflow (>80): Signal of intense buying pressure; the trend is strong but watch for exhaustion.
- Extreme Outflow (<20): Signal of heavy liquidation; potential for a "oversold" bounce.
- Divergences: If the price makes a new high but the IOI makes a lower high, it suggests the move lacks the "volume fuel" to continue, signaling a potential reversal.
Godspeed friends!
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.