Chaikin Money Flow¶

OVERVIEW¶

Chaikin Money Flow (CMF) is a volume-weighted momentum oscillator built by Marc Chaikin, a former NYSE specialist and founder of Chaikin Analytics. It measures whether a stock has been accumulated or distributed over the look-back period — by default 20 bars — by combining where each bar closed within its range with the volume that traded on that bar. CMF oscillates between -1 and +1: positive values indicate net buying pressure, negative values indicate net selling pressure.

Default Settings

CMF uses a 20-bar look-back period by default and oscillates between -1 and +1.

CMF Value	Signal
Above +0.25	Strong accumulation
0 to +0.25	Mild buying pressure
-0.25 to 0	Mild selling pressure
Below -0.25	Strong distribution

HOW IT'S CALCULATED¶

CMF requires three steps.

Step 1 — Money Flow Multiplier (MFM)

MFM = ((Close − Low) − (High − Close)) / (High − Low)

Range: -1 (close at low) to +1 (close at high). A close at midpoint = 0.

Step 2 — Money Flow Volume (MFV)

MFV = MFM × Volume

Step 3 — CMF over n bars (default n = 20)

CMF = Σ MFV(n) / Σ Volume(n)

WORKED EXAMPLE¶

Worked Example

NVDA on a single bar — High: $920 | Low: $880 | Close: $915 | Volume: 48M

MFM = ($35 − $5) / $40 = +0.75
MFV = 0.75 × 48M = +36M

That bar contributes +36M to the 20-bar numerator and 48M to the denominator. A 20-bar window of similar bars would push CMF toward +0.75.

Real readings: NVDA's 20-bar CMF averaged +0.28 from January through March 2024 during its post-earnings rip from $480 to $950 — a textbook strong-accumulation signature confirmed by unusual options activity and 13F filings.

WHEN TRADERS USE IT¶

Trend Confirmation

Price uptrend with CMF > 0.10 = institutional support; uptrend with CMF < 0 = a warning that the rally is short-covering, not accumulation.

Divergence Trading

Price prints a higher high while CMF prints a lower high → bearish divergence. The May 2021 AMC peak showed exactly this — price at $72 with CMF rolling from +0.35 to +0.05.

Breakout Filtering

Range breakouts with CMF > 0.20 have measurably higher follow-through rates than breakouts with CMF near zero.

Sector Scanning

CMF screens isolate names where volume is voting the same direction as price across sectors.

LIMITATIONS AND COMMON MISCONCEPTIONS¶

Important Constraints

CMF is a price-location-weighted volume statistic. It is not a literal measurement of capital flowing into or out of a stock. Every share sold has a buyer — net dollar flow is zero by definition.

Limitation	Detail
Gap-blind	The Money Flow Multiplier uses each bar's own high, low, and close — it doesn't see the gap between yesterday's close and today's open. On gap-heavy names like TSLA earnings reactions, CMF can mislead.
Low-float distortion	A few large prints on illiquid names can flip CMF.
Lag at turning points	With a 20-bar window, CMF lags by roughly 10 bars at trend reversals.
Not capital flow	CMF is a price-location-weighted volume statistic, not a literal capital-flow measurement. Every share sold has a buyer — the dollar flow is zero by definition.