Extra indicators
CMF: Chaikin Money Flow
The balance of buying and selling pressure over the last 20 candles, between −1 and +1.
The idea in plain words
Like the A/D line, it weighs volume by where each candle closed in its range, but over a fixed window, so it is easy to compare over time.
How it is calculated
Sum of (close location × volume) divided by sum of volume over 20 candles.
CMF = Σ(close location × volume) ÷ Σ volume over 20, close location = ((close − low) − (high − close)) ÷ (high − low)How to use it
- Above zero: buying pressure; below zero: selling pressure.
- Readings above +0.1 or below −0.1 for a while confirm a trend.
Drawing conclusions
- Divergences with price warn of weakening trends.
Example
A stock breaks out while CMF rises to +0.25: the breakout is backed by buying.
Prices in examples are illustrative.
Watch out for
- On currencies, metals and CFDs there is no central exchange volume. The chart uses "tick volume", the number of price changes in each candle, which follows real activity closely but is not the number of contracts traded.
A little history
Marc Chaikin.
Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.