Previous Trading System Labs have featured examples of adaptivity, such as using Bollinger Bands to create dynamic overbought-oversold thresholds for the relative strength index (RSI), but there are other ways to create a market-driven indicator. One of them is based on the frequency of market swings — the time between swing highs or swing lows.

The following test shows the results of applying the technique to the Money Flow Index (MFI), which resembles the RSI but also incorporates volume. The core of the indicator, the Money Ratio, is the cumulative sum of daily positive and negative Money Flow, which is then normalized into an oscillator.