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Re: IAMLEGEND post# 9654

Sunday, 02/05/2012 12:18:19 AM

Sunday, February 05, 2012 12:18:19 AM

Post# of 83010

~~link back for previous lessons~~

Chaikin Money Flow
measures the amount of Money Flow Volume over a specific period. Money Flow Volume forms the basis for the Accumulation Distribution Line. Instead of a cumulative total of Money Flow Volume, Chaikin Money Flow simply sums Money Flow Volume for a specific look-back period, typically 20 or 21 days. The resulting indicator fluctuates above/below the zero line just like an oscillator. Chartists weigh the balance of buying or selling pressure with the absolute level of Chaikin Money Flow. Chartists can also look for crosses above or below the zero line to identify changes on money flow. Positive CMF would confirm an uptrend, but negative CMF would call into question the strength behind an uptrend. The reverse holds true for downtrends.

Generally, buying pressure is stronger when the indicator is positive and selling pressure is stronger when the indicator is negative.


Divergence can show up in the indicator when the chaikin money flow indicator makes a higher high, while the price action makes a lower low. This implies that there is less selling pressure pushing the security lower, thus a bounce is in order.




Chaikin Money Flow is a good oscillator and it is easy to understand for those who want to study buying and selling pressure of a stock. Its core philosophy is that money flow is bullish when the CMF is positive and the bearish when the CMF is negative. Divergences between the CMF indicator and prices can alert traders that current sentiment is about to change. The Chaikin Money Flow indicator is unique in that it uses price and volume in its analysis as opposed to using only price or volume alone. By incorporating both, the CMF provide analyst with a different perspective than most other indicators. Like many other oscillators, traders can improve their performance by using the CMF in conjunction with other indicators, such as the RSI. Overall the Chaikin Money Flow indicator is a good tool for identifying buying and selling pressure.

* 20% Profit Rule
* Do your DD
* Follow the Charts-Trend
* Stop loss
* Buy at Support,Sell at Resistance
* Dont chase momentum stocks
* Control Fear & Greed