Chaikin money flow
Mean reversionIntermediate
Marc Chaikin's money flow multiplies volume by where the close sits inside the bar's range, then sums that value over a window and divides by volume. A close near the high adds buying pressure. A close near the low adds selling pressure. Persistent readings above zero support a long bias. Crosses of zero are a blunt timing tool.
Not investment advice. Nothing here is a recommendation to buy or sell anything. Backtests and historical studies are not guarantees, and a rule that worked in one sample can fail in the next. Trading can lose money. Links are for education, not endorsements. Do your own research.
- Rules
- A common window is 20 or 21 days. Stand aside from new longs when CMF is negative, and treat a push back above zero as permission to take a long setup from another rule. A divergence, price rising while CMF trends down, is a warning to tighten risk rather than an automatic short. Exit longs if CMF loses zero and price breaks a swing.
- Where AI fits
- AI can use the sign and slope of CMF as a filter on an existing entry and report the change in trade count, not a new story about smart money. It should align the volume series with the price series and drop half-sessions. Fitting the window to the last rally overstates the filter.
- Markets
- Stocks and ETFs. Futures need a volume series you trust.
- Timeframes
- Daily.
- Risks
- A single high-volume close at the high pins the oscillator up. Closing auctions and rebalance days distort the close location. CMF is related to the accumulation/distribution line, so the two are not separate evidence.