Chaikin Money Flow
Volume & money flow
The same logic as the A/D line, but as an oscillator over a fixed window of 20 days instead of cumulative. That keeps it fluctuating around zero and makes it easier to read.
In its original form this indicator uses volume and/or the daily range (High/Low). The scanner only has closing prices and approximates those inputs (see the note at the bottom). So treat the absolute values as indicative; the direction and the crossings remain usable.
Construction & calculation
- Compute the Money Flow Volume per day (as with the A/D line).
- Add that up over 20 days and divide by the total volume over those same 20 days.
- The result fluctuates between -1 and +1, in practice mostly between -0.25 and +0.25.
CMF = sum(MFV, 20) / sum(Volume, 20)
Interpretation
- CMF above zero: on balance money is flowing into the stock (accumulation).
- CMF below zero: money is flowing out (distribution).
- Above +0.25 or below -0.25 points to pronounced, one-sided pressure.
- If the CMF stays on one side of zero for more than a month, that is a strong trend argument.
How the signal works in this scanner
Buy signal (green)The CMF crosses the zero line from below to above and reaches at least +0.05 (the threshold filters out the fuss around zero). If there is no crossing, the scanner looks for a bullish divergence over 20 bars.
Sell signal (red)The CMF crosses below the zero line to at least -0.05, or there is a bearish divergence.
Watch-outs & pitfalls
- Like the A/D line, the CMF ignores opening gaps.
- The 0.05 threshold is built in deliberately: without that filter a stock bobbing around zero would give a signal every week.