A novel financial indicator for analyzing capital flow stability and systemic market friction — inspired by fluid dynamics.
The Systemic Flow Resistance Index (SFRI) quantifies how efficiently or inefficiently capital flows through a market, similar to how liquids behave under pressure and resistance in fluid mechanics.
| Financial Market | Fluid Dynamics Equivalent |
|---|---|
| Price Movement | Pressure Difference |
| Trading Volume | Flow Rate |
| Spread (High - Low) | Flow Resistance |
| SFRI | Systemic Viscosity Index |
- High SFRI = Capital congestion → potential volatility or stress buildup
- Low SFRI = Smooth capital flow → structurally healthy markets
Price Change = df['Close'].diff()
Effective Flow = df['Volume'] * abs(Price Change)
Spread = df['High'] - df['Low']
SFRI = (abs(Price Change) * Spread) / (Effective Flow + epsilon)
SFRI *= 10000 # For better readability