Chaikin Money Flow Indicator for ThinkorSwim TOS Script

The Chaikin Money Flow oscillator is calculated by default as a cumulative total of theAccumulation/Distribution Values divided by the total volume for the same period.

It is considered a bullish signal, when the Chaikin Money Flow value is greater than zero, whereas bearish signals are indicated by negative values of the oscillator.

Input Parameters

length The number of bars used to calculate the Chaikin Money Flow.

 

Developed by Marc Chaikin, 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 thezero 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 moneyflow.

Chaikin Money Flow can be used to define a general buying or selling bias simply with positive or negative values. The indicator oscillates above/below the zero line. Generally,buying pressure is stronger when the indicator is positive and selling pressure is stronger when the indicator is negative.

While this zero line cross seems simple enough, the reality is much choppier. Chaikin Money Flow sometimes only briefly crosses the zero line with a move that turns the indicator barely positive or negative. There is no follow through and this zeroline cross ends up becoming a whipsaw (bad signal). Chartists can filter these signals with buffers by setting the bullish threshold a little above zero(+0.05) and the bearish threshold a little below zero (-0.05). These thresholds will not entirely eliminate bad signals, but can help reduce whipsaws and filter out weaker signals.

Chaikin Money Flow is an oscillator that measures buying and selling pressure over a set period of time.At its most basic, money flow favors the bulls when CMF is positive and the bears when negative. Chartists looking for quicker money flow shifts can look for bullish and bearish divergences. Be careful though. Selling pressure still has the edge in negative territory, even when there is a bullish divergence.This bullish divergence simply shows less selling pressure. It takes a move into positive territory to indicate actual buying pressure. As an money flow oscillator, CMF can be used in conjunction with pure price oscillators, such as MACD or RSI. As with all indicators, Chaikin Money Flow should not be used as a stand-alone indicator. Marc Chaikin also developed the Accumulation Distribution Line and the Chaikin Oscillator.

 

Works with ALL Futures,Forex Currency Pairs, and Stocks

Works with the ThinkOrSwim trading platform

Download link will be emailed upon purchase of the software.