Description:
Chaikin Money Flow (CMF) is a volume-weighted indicator that measures buying and selling pressure over a given period by analyzing the closing price's position within the daily range and factoring in volume. It is calculated by taking the Money Flow Multiplier—determined by where the price closes relative to the high-low range—multiplying it by volume, and then averaging the result over a specified period. A positive CMF value suggests buying pressure, while a negative CMF value indicates selling pressure.
Input Parameters:
- Length: Number of periods used in the calculation.
Use Cases:
- Assessing Buying and Selling Pressure: A positive CMF value indicates accumulation (buying pressure), while a negative value suggests distribution (selling pressure). Strongly positive or negative readings can confirm market trends.
- Confirming Trends: When CMF aligns with price movements (e.g., rising CMF with rising prices), it suggests strong trend confirmation. If CMF diverges from price movements, it may indicate weakening momentum.
- Identifying Potential Reversals: If the price continues to rise but CMF starts to decline, it may indicate that buying pressure is weakening, suggesting a possible reversal. Similarly, a rising CMF while the price is falling could signal strengthening buying interest.
This feature can be used in:
- Market Scanner
- Strategy Tester
- Multi-Factor Alerts
- Smart Checklist
Do you want to learn more? Check out our Learning Center Article.
Mar 5, 2025