Chaikin Money Flow
The sum of volume weighted by close position over n periods, divided by total volume over the same periods.
Formula
CMF = Sum of (Money Flow Multiplier x Volume) over n / Sum of Volume over n
Unit
ratio (x, times)
In depth
CMF converts the accumulation/distribution idea into a bounded oscillator between -1 and +1 by dividing by total volume, which removes the arbitrary starting level that makes OBV and the A/D line hard to interpret. Readings near zero mean closes have sat near the middle of their ranges on balance. It inherits the gap blindness of its multiplier, so it can misread a security that gaps regularly. The 20-period or 21-period setting is convention, and no forecast attaches to any reading.
Worked example
Over 20 periods the weighted volume sums to 18,00,000 against total volume of 90,00,000, giving CMF = 0.20. A reading of 0.20 means closes averaged one-fifth of the way toward the top of their ranges, volume-weighted.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Chaikin Money Flow” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.