Volume Flow Indicator

What is the Volume Flow Indicator?

The Volume Flow Indicator (VFI) is a volume-flow oscillator introduced by Markos Katsanos in 2004 as a refinement of the cumulative flow-line family that includes OBV and volume price trend. Each bar's volume is signed by the direction of the change in typical price (the average of high, low, and close) rather than the close alone, and only when that change clears a volatility-scaled cutoff; smaller fluctuations count as noise and contribute nothing. Volume is also capped at a multiple of its recent average so a single extreme print cannot dominate the reading.

The signed, filtered volume is summed over a long rolling window (130 bars in the published version), scaled by average volume, and usually smoothed, producing a line that oscillates around zero. Readings above zero are read as net accumulation and readings below zero as net distribution; zero-line crosses and divergences against price are the standard signals. The filtering makes VFI steadier than raw OBV, at the cost of extra lag.

How traders use it

• As a slow trend filter: VFI above zero supports a long bias and below zero a short bias, with the zero-line cross treated as a regime change rather than a precise entry.
• For divergence: price making new highs while VFI fails to follow suggests the advance lacks volume support, the same read as OBV divergence but with the noise filtering built in.
• As confirmation alongside price signals: taking breakouts or moving-average crosses only when VFI agrees, on the view that volume flow should back the move; agreement adds conviction, not certainty.