Q: Divergence

- **Bullish divergence:** Price makes lower low, CMF makes higher low - **Bearish divergence:** Price makes higher high, CMF makes lower high

Q: Trend confirmation

- Rising CMF during an uptrend confirms buying interest - Falling CMF during a downtrend confirms selling pressure

Q: Parameters

| Parameter | Default | Description | |-----------|---------|-------------| | Period | 20 | Number of candles for the rolling window |

Q: Example conditions

| Condition | Meaning | |-----------|---------| | `CMF(20) > 0` | Buying pressure is dominant | | `CMF(20) 0.25` | Strong buying pressure | | `CMF(20) < -0.25` | Strong selling pressure |

Q: Tips

- CMF is one of the best oscillators for detecting institutional buying/selling - Values staying persistently above 0 indicate sustained accumulation - Values staying persistently below 0 indicate sustained distribution - Combine CMF with price breakouts — a breakout with CMF > 0 is more likely to succeed - CMF works best on daily and 4h timeframes for swing trading - Shorter periods (10) make CMF more responsive; longer periods (30) smooth out noise

Question 1

What is CMF?

Accepted Answer

Chaikin Money Flow (CMF) measures the amount of Money Flow Volume over a specific period. Developed by Marc Chaikin, it uses the same Money Flow Multiplier as ADL but averages it over a window, producing a bounded oscillator that shows whether buying or selling pressure is dominant.

Question 2

How it works

Accepted Answer

CMF is calculated as the ratio of the sum of Money Flow Volume to the sum of Volume over the period: ``` Money Flow Multiplier = ((Close - Low) - (High - Close)) / (High - Low) Money Flow Volume = MFM x Volume CMF = SUM(Money Flow Volume, period) / SUM(Volume, period) ``` The result oscillates between -1 and +1, though extreme values are rare. In practice, CMF typically ranges between -0.5 and +0.5.

Question 3

Key features

Accepted Answer

- **Bounded oscillator** — ranges from -1 to +1 - **Zero line significance** — above 0 = buying pressure, below 0 = selling pressure - **Period-based** — uses a rolling window (default 20), unlike cumulative ADL - **Money flow direction** — combines close position within range with volume - **Quick-reacting** — responds faster than cumulative indicators like OBV or ADL

Question 4

Zero line crossover

Accepted Answer

- **CMF > 0** — buying pressure dominates, bullish bias - **CMF < 0** — selling pressure dominates, bearish bias - **CMF crosses above 0** — momentum shifting to buyers - **CMF crosses below 0** — momentum shifting to sellers

Question 5

Strength of signal

Accepted Answer

- **CMF > 0.25** — strong buying pressure - **CMF < -0.25** — strong selling pressure

Question 6

Divergence

Accepted Answer

- **Bullish divergence:** Price makes lower low, CMF makes higher low - **Bearish divergence:** Price makes higher high, CMF makes lower high

Question 7

Trend confirmation

Accepted Answer

- Rising CMF during an uptrend confirms buying interest - Falling CMF during a downtrend confirms selling pressure

Question 8

Parameters

Accepted Answer

| Parameter | Default | Description | |-----------|---------|-------------| | Period | 20 | Number of candles for the rolling window |

Question 9

Example conditions

Accepted Answer

| Condition | Meaning | |-----------|---------| | `CMF(20) > 0` | Buying pressure is dominant | | `CMF(20) 0.25` | Strong buying pressure | | `CMF(20) < -0.25` | Strong selling pressure |

Question 10

Tips

Accepted Answer

- CMF is one of the best oscillators for detecting institutional buying/selling - Values staying persistently above 0 indicate sustained accumulation - Values staying persistently below 0 indicate sustained distribution - Combine CMF with price breakouts — a breakout with CMF > 0 is more likely to succeed - CMF works best on daily and 4h timeframes for swing trading - Shorter periods (10) make CMF more responsive; longer periods (30) smooth out noise