CMF — Chaikin Money Flow

Overview

Chaikin Money Flow measures the volume-weighted accumulation/distribution pressure over a set period, oscillating between −1 and +1 to show sustained buying or selling. CMF is one of the most reliable volume indicators for confirming breakouts in stocks and crypto. Use it alongside the OBV for dual volume confirmation in your trading strategies.

How It Works

CMF = Sum of [((Close − Low) − (High − Close)) / (High − Low) × Volume] over N periods / Sum of Volume over N periods. Default period is 20. Positive CMF indicates buying pressure; negative CMF indicates selling pressure. Persistent readings above or below zero carry the strongest message.

Key Signals

• CMF above zero = net buying pressure (accumulation).
• CMF below zero = net selling pressure (distribution).
• CMF divergence from price warns of false breakouts or breakdowns.
• Rising CMF accompanying a price breakout confirms the move is volume-backed.

Common Mistakes

• Treating brief CMF dips below zero in an uptrend as sell signals — focus on sustained readings.
• Using CMF on illiquid markets where volume data is unreliable.
• Not comparing CMF with price structure — context determines significance.