Chaikin Money Flow - MetaTrader 5 Script | Forex Indicator Download - MT4/MT5 Resources
Chaikin Cash Flow (CMF) is a technical analysis indicator that measures the magnitude of cash flow over a given period of time. Cash flow (also a concept created by Mark Chaikin) is a measure of the pressure to buy and sell a security over a single period. CMF then summarizes the cash flows for the user-specified analysis period. Any retrospective analysis period can be used, but the most popular settings are 20 or 21 days. Chaykin cash flow values range from 1 to -1. CMF can be used as a method to further assess changes in buyer and seller pressure and can help predict future changes and thus trading opportunities.
The calculation of the Chaykin cash flow (CMF) consists of three independent steps .
Fund Flow Multiplier = ((Closing Price - Lowest Price) - (Highest Price - Closing Price)) / (Highest Price - Lowest Price)
Fund Flow Multiplier * Trading Volume
CMF( Period ) = Sum( Period ) Fund Flow / Sum( Period ) Volume
Buyer and seller pressure can be determined by the closing position of a period relative to its highs/lows. Buyer pressure is higher if the cycle closes in the upper half of the bar range, and seller pressure is higher if the cycle closes in the lower half of the bar range. This is the cash flow multiplier (step 1 in the calculation above). Based on the Cash Flow Multiplier , Cash Flow (2) and finally (3) Chaykin Cash Flow (CMF) is determined. Chaykin cash flow values range from 1 to -1.
The basic explanation is: When the CMF is closer to 1, the buyer pressure is greater. When the CMF is closer to -1, the selling pressure becomes stronger.
trend confirmation
Buyer and seller pressure can be a good way to confirm an ongoing trend. This can give traders additional confidence that the current trend is likely to continue. During a bullish trend, sustained buying pressure (Chaykin Money Flow values above 0) may indicate that prices will continue to rise. During a bearish trend, sustained selling pressure (chaykin money flow value below 0) may indicate that the price will continue to fall.
When Chaikin flows cross the zero line, it may indicate that the trend is about to reverse. When the indicator line crosses the zero line from the bottom to the top, the price is likely to rise further. When the indicator line crosses the zero line from top to bottom, the price may fall further. It should be noted that, like most indicators, the CMF can have short-term crossovers that can lead to false signals. The best way to avoid such signals is to analyze the behavior of a specific security and adjust the threshold accordingly. For example, instead of crossing the zero line, you could use two separate lines, such as 0.05 and -0.05.
The calculation of Chaikin cash flows does have some flaws , as the cash flow multiplier plays a role in determining cash flows as well as the value of the indicator, and it does not take into account changes in the trading range between periods. If any gap occurs, it will not be detected and therefore, the indicator line and price will not synchronize here.
Chaikin's money flow is a good indicator that allows you to analyze buying and selling pressure during a given observation period. The indicator does not have to be used alone as a standalone indicator to generate signals. CMF works well in combination with other indicators, especially those also created by Chaikin: Accumulation/Distribution (ADL) and Chaikin Oscillator.
Attachment download
📎 chaikinmoneyflow.mq5 (4.47 KB)
Source: MQL5 #49029
💡 Featured Recommendations
✍️ Latest by the author
- •
- •
- •
- •
- •
- •
📌 Popular topics
- •
- •
- •
- •
- •
- •
- •
- •
🔗 You May Be Interested In
- •
- •
- •
- •
- •
- •
