Does the Money Flow Index strategy beat buy & hold on Total US Market ETF (VTI)? (VTI · backtested honestly)
The Money Flow Index is a volume-weighted version of RSI: instead of counting price changes alone, it weights each day by its trading volume (using the typical price - the high, low and close averaged - times volume), then measures how stretched recent buying pressure is versus selling pressure on a 0 to 100 scale. Below 20 is called 'oversold', above 80 'overbought' - a gauge of stretch, not a prediction of a turn. Buy when it is oversold, betting on a bounce, and exit when it becomes overbought. It is the same mean-reversion bet as the RSI Reversion rule already in this library, with volume as the only extra information - so on constant, thin or volume-less data it collapses toward plain RSI. Like any mean-reversion oscillator it fights the trend and whipsaws in choppy ranges, so a strong move can run it over (a falling knife), and volume itself can be noisy or patchy.
Over this period, Money Flow Index on Total US Market ETF (VTI) returned +33.3%, while simply buying and holding returned +73.9% — it lagged buy & hold by 40.6 points, with a worst drawdown of -21.5%. It traded 5 times and sat in cash about 61% of the time. It's a mechanism you test — not a recommendation.
That's the past — settled, free, and the weakest proof there is. The honest next move isn't to trust it — it's to try to break it: does the edge hold across nearby settings and time, or was it luck? Most strategies that look good here don't survive that, and most should stop there. The few that do still haven't met a future nobody has lived yet. Forward-test Money Flow Index on Total US Market ETF (VTI) on paper — zero hindsight, losses and all — and get a mechanical alert the day it signals (you trade on your own broker). A hindsight-free track record can only be built by time passing, so the only way to have proof in three months is to start today.
Or stop here — a backtest you can kill for free has already done its job. And if it keeps surviving, that's the rare idea worth trusting with real money.
Run it yourself
Change the parameters and the window, then re-run — no account needed.
A live badge that re-runs itself and links back here. Free to embed on any blog, newsletter or forum — it shows the honest result, beat or lagged.
<iframe src="https://stratsemble.com/embed/total-market-etf-mfi-backtest" width="360" height="252" style="border:0;border-radius:12px;max-width:100%" loading="lazy" title="Does the Money Flow Index strategy beat buy & hold on Total US Market ETF (VTI)?"></iframe>- • The strategy line is Money Flow Index on Total US Market ETF (VTI); the dashed line is simply buying and holding VTI. Beating the dashed line is the whole point — many strategies don't.
- • Max drawdown is the worst peak-to-trough fall you'd have sat through. A higher return with a much deeper drawdown is not obviously better.
- • Every fill assumes next-open execution with costs & slippage on — no acting on prices you couldn't have known.
- • A small number of trades means a small sample. Treat a great-looking result on a handful of trades with suspicion.
This is a hypothetical backtest of a well-known mechanism on past data. It is not advice, not a prediction, and not a claim that the strategy works. I hold no funds and place no orders. The value here is the ability to test an idea honestly — see where it would have helped, and where it would have hurt — before you ever risk real money on your own broker.
How this is computed → · who's behind it · where a backtest fits