What is Chaikin Money Flow?

What is Chaikin Money Flow (CMF)?

Chaikin Money Flow is a volume-weighted oscillator that measures buying and selling pressure. It evaluates whether money is flowing into or out of a market by combining price action with volume.

How CMF Works

• Money flow multiplier: Locates the close within the period's range.
• Money flow volume: Multiplier multiplied by volume.
• CMF value: Sum of money flow volume over a set number of periods divided by total volume.
• Oscillation: Values move between +1 and -1.

Trading Applications

• Trend confirmation: Pair positive CMF with bullish breakouts.
• Divergence signals: Watch for CMF failing to confirm new price highs.
• Filter entries: Combine with price action or volatility tools.
• Adjust settings: Shorter lookbacks react faster but add noise.

Practical Playbook

• Define context on higher timeframes, then execute on intraday charts.
• Wait for confirmation (acceptance, momentum, or confluence) before entry.
• Size positions conservatively and place stops at clear invalidation levels.
• Adapt to session dynamics; conditions shift between Asia, London, and New York.

Common Pitfalls

• Forcing trades without alignment across timeframe, structure, and catalyst.
• Ignoring spreads/slippage during news or thin liquidity.
• Moving stops or adding to losers instead of honoring the plan.

Illustrative Example

Build a simple playbook: identify bias, mark key zones/levels, define triggers and invalidation, and pre‑set targets for 2–3R. Journal results by session and setup to refine rules. Over time, consistency—not prediction—drives outcomes.

Practical Playbook

• Define context on higher timeframes, then execute on intraday charts.
• Wait for confirmation (acceptance, momentum, or confluence) before entry.
• Size positions conservatively and place stops at clear invalidation levels.
• Adapt to session dynamics; conditions shift between Asia, London, and New York.

Common Pitfalls

• Forcing trades without alignment across timeframe, structure, and catalyst.
• Ignoring spreads/slippage during news or thin liquidity.
• Moving stops or adding to losers instead of honoring the plan.

Illustrative Example

Build a simple playbook: identify bias, mark key zones/levels, define triggers and invalidation, and pre‑set targets for 2–3R. Journal results by session and setup to refine rules. Over time, consistency—not prediction—drives outcomes.