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Chaikin Money Flow (CMF)

The Chaikin Money Flow is an indicator measuring the amount of Money Flow Volume over a specific period. It is calculated by adding Money Flow Volume for a specific period (usually 20 or 21 days). The indicator fluctuates above and below 0 (-1 to +1).

The indicator can be used to see the selling and buying pressure with CMF. Positive CMF means that there is buying pressure, while negative CMF means there is selling pressure. So positive CMF indicates an uptrend, while a negative CMF indicates a downtrend.

Another use for CMF is looking for crossovers. A cross through the 0 lines upwards can indicate a positive trend. While a cross downward can be used as an indicator of a negative trend.

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Chaikin Money Flow Formula

  1. Money Flow Multiplier = [(Close  -  Low) - (High - Close)] /(High - Low) 

  2. Money Flow Volume = Money Flow Multiplier x Volume for the Period

  3. 20-period CMF = 20-period Sum of Money Flow Volume / 20 period Sum of Volume 

Formula Source: StockCharts

For more information (also the source) visit: StockCharts