Chaikin Money Flow (CMF)

What is Chaikin Money Flow (CMF)?

Chaikin Money Flow (CMF) is a volume indicator developed by Marc Chaikin that averages where bars close inside their high-low ranges, using each bar’s volume as the weight, over a set window that is standardly 21 periods. It runs from −1 to +1. Positive values mean the volume-weighted close location sits above the midpoint; negative values mean it sits below.

The chart below uses the standard 21-bar window. Read CMF against the price swings it accompanies: rising price with rising CMF has buying pressure behind it.

How is Chaikin Money Flow calculated?

For each positive-range bar, multiplier = (2 × close − high − low) / (high − low). Multiply that value by the bar’s volume.

CMF = sum of weighted volume / sum of volume over the selected window. For valid bars, nonnegative volumes and positive total volume, the result lies from −1 to +1.

A zero-range bar gets a zero multiplier and keeps its volume in the denominator, which pulls the reading toward zero.

How volume weights and the rolling window move CMF

CMF reads relative volume: double every bar’s volume and the reading stays the same, so a busy session moves it only when it outweighs the rest of the window.

A lower CMF means the window’s volume-weighted closes sit lower in their ranges, whatever total volume did. To find the source of a move, check both ends of the window: subtract the outgoing bar’s contribution and add the incoming one.

The formula uses each bar’s own range. A close above that range’s midpoint contributes positively even when it is below the previous bar’s close. Check the gap on the price chart: a stock that gaps down and closes near the top of its new range adds to CMF while losing ground on the day.

Chaikin Money Flow vs OBV and the A/D Line

OBV signs volume by close-to-close direction. A/D accumulates close-location-weighted volume. CMF normalizes that same weighted volume within its rolling window.

How traders use Chaikin Money Flow

Choose a threshold, duration or swing comparison and pair it with a specific price trigger. Then define entry, invalidation, position size and exit.

The chart’s selected price highs rise from $50.80 to $51.90 and $52.40 while CMF declines from 0.31 to 0.16 and 0.04. Bar 12 crosses below zero at −0.03. That is buying pressure draining out of a rally that still makes higher highs, and the zero cross puts the window on the selling side.

With CMF below zero while price still makes higher highs, Options Flow shows whether large orders are buying puts at the ask or selling calls at the bid, and the Options Profit Calculator prices the bearish structure at your target.

Limitations of Chaikin Money Flow

• Read CMF as pressure in the closes. Every trade has a buyer and a seller, so the indicator scores where the volume settled inside each range, near the highs or near the lows.
• Check gaps on the price chart. A close above its own bar’s midpoint adds to CMF even when it sits below the previous close.
• Trace each move to both ends of the window. The reading changes with the bar that entered and the bar that dropped out, so check which one moved it before acting.
• Hold the settings fixed. Lookback, bar interval, session and zero-range handling all move the value, and the ±0.10 guides are the rule levels this chart uses, so test any level on your own market before trading it.
• Trade a divergence with a price trigger. In the chart, price makes higher highs at $50.80, $51.90 and $52.40 while CMF falls to 0.04, and a close below the last swing low turns that warning into an exit or a short.

Bottom line

Chaikin Money Flow condenses a window of bars into one bounded reading of where closes settled within their ranges, weighted by volume. Use it as a filter or swing comparison alongside a specific price trigger, trace large changes to the bars entering and leaving the window, and read it as the buying or selling pressure in where the volume closed.