What is Chaikin Money Flow?
Chaikin Money Flow (CMF)
Forex Trading Glossary
Quick Answer: Chaikin Money Flow is a volume-weighted oscillator that reveals whether money is flowing into or out of a market.
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.
Interpreting CMF
Positive readings point to accumulation, negative readings point to distribution.
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.
Related Terms
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