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# Chaikin Money Flow

The Chaikin Money Flow indicator was developed by Marc Chaikin and uses the price action and volume to identify if the asset is being bought or sold i.e. money flowing in or out.

The principal behind the Chaikin Money Flow indicator is that during bullish markets, the price closes in the upper half of the trading range with volume increasing. During bearish markets the expectation is that the price closes in the lower half of the trading range for the volume increasing.

As per the Accumulation Distribution indicator, the Chaikin Money Flow indicator is useful for identifying trend changes when the price diverges from the Chaikin Money Flow indicator trend. Unlike the Accumulation Distribution indicator where the entire data series is used to calculate the indicator value, the Chaikin Money Flow indicator is calculated over a finite number of periods therefore it tends to oscillate within trading ranges, for example between 0.2 and -0.2 in the following chart:

The trading range can be potentially used to identify points of potential price reversal. Alternatively you may wish to consider using it as the source data for Bollinger Bands to help identify points of reversal for the trading range; click here to learn more about creating custom indicators.

## Chaikin Money Flow Formula

The following formula is used to calculate the Chaikin Money Flow indicator:

${\displaystyle {\text{Chaikin Money Flow}}=\displaystyle {\frac {\displaystyle \sum _{1}^{n}\left({\frac {({\text{HIGH}}-{\text{LOW}})-({\text{HIGH}}-{\text{CLOSE}})}{({\text{HIGH}}-{\text{LOW}})}}*{\text{VOLUME}}\right)}{\displaystyle \sum _{1}^{n}{\text{VOLUME}}}}}$

Where ${\displaystyle n}$ is the number of periods used to determine the Chaikin Money Flow value, with 20 periods being the default.

## Chaikin Money Flow Indicator

The Chaikin Money Flow indicator can be displayed on the TimeToTrade charts. To add the Chaikin Money Flow indicator to the TimeToTrade charts, go to the chart settings and click on the 'Add Indicator' button. Click on the search box and type the name of the indicator that you are looking for, or for example type Chaikin Money Flow and scroll through the results:

After adding the Chaikin Money Flow indicator, within the chart settings, click on it to set the parameters and change colours.

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