Measure institutional buying and selling pressure using price and volume.
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Overview
The Chaikin Money Flow (CMF) indicator, developed by Marc Chaikin, measures the amount of money flow volume over a specific period (typically 20 or 21 periods). It combines price location within the daily range with volume to determine whether a security is under accumulation (buying pressure) or distribution (selling pressure).
The calculation involves two steps. First, the Money Flow Multiplier = ((Close β Low) β (High β Close)) Γ· (High β Low). This places the close relative to the daily range on a scale from β1 (close at the low) to +1 (close at the high). Second, the Money Flow Volume = Multiplier Γ Volume. CMF = Sum of Money Flow Volumes over N periods Γ· Sum of Volumes over N periods.
The result oscillates between β1 and +1. Values above 0 indicate net buying pressure (accumulation); below 0 indicate net selling pressure (distribution). Sustained CMF above +0.25 signals strong institutional buying; below β0.25 signals strong distribution. The zero-line crossover is the primary signal.
Divergence is a powerful application: if price makes new highs but CMF fails to confirm (remains in negative territory or declines), it signals that the rally is not backed by real buying pressure β a bearish warning. The reverse applies for bullish divergence.
Strategy Code
This is a TradingView Pine Script example for this indicator. Paste it into the TradingView Pine Editor, add it to your chart, and adjust inputs for your market and timeframe.
//@version=6
strategy("Chaikin Money Flow (CMF)", overlay=true)
fastLen = input.int(20, "Fast Length")
slowLen = input.int(50, "Slow Length")
fast = ta.ema(close, fastLen)This is a thinkorswim ThinkScript example for this indicator. Open thinkorswim, create a custom study, paste the script, and apply it to your chart.
def cmf = ChaikinMoneyFlow(length = 20);
def buySignal = cmf crosses above 0;
def sellSignal = cmf crosses below 0;
AddOrder(OrderType.BUY_AUTO, buySignal, close, 1, Color.GREEN, Color.GREEN, "CMF Buy");
AddOrder(OrderType.SELL_AUTO, sellSignal, close, 1, Color.RED, Color.RED, "CMF Exit");Join thousands of traders who use auto-Trading to execute this strategy automatically, 24/7.
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