Chaikin Money Flow (CMF) indicator tool was developed by a man named Marc Chaikin. He is coached by the most successful institutional investors in the world.

Therefore, CMF itself is a hidden product of the wisdom of successful traders, and that is why Chaikin Money Flow is the best volume indicator.

Chaikin Money Flow is better than traditional volume in that it measures when large cash flows accumulate stock when distribution releases. In other words, if you know how to use CMF, you can know if the market is being priced or not and which direction it will run. And that is also the strongest point of CMF.


This strategy uses two extremely useful techniques that you probably never knew before.

Chaikin Money Flow will significantly improve your entry timing skills and it teaches you when to stop to preserve your profits. Aren't these two issues that we traders are concerned with. Chaikin Money Flow will take care of that.

Here are 5 steps to implementing a trading strategy using Chaikin Money Flow with examples

Step 1: Chaikin Volume Indicator must increase a circuit from below -0.15 to above 0.15

When the volume goes from low to high, it is a sign of a potential large money inflow. We must see this.

Chaikin Money Flow will go from below zero (negative numbers) incrementally and upwards from point 0 (positive numbers). It is a clear signal that the large cash flow is buying and accumulating a large number of goods to prepare to push the price up.

As we all know, following a shark for food is always wiser than dealing with it. We just don't know which way it goes.

Chaikin Money Flow helps us to see if it is accumulating and preparing to go up. But drilling into the command. The story is not that easy.

Step 2: Wait for Chaikin Money Flow to pullback below the zero lines. The price also needs to maintain above the previous low

In the first step, we only discover the footprint of large cash flow but do not know how they act specifically.

In this second step, we must look for other signs that they are depressing the price to consolidate. How? Notice that Chaikin Money Flow will slowly pullback back below the zero lines. If it is too fast, it is considered a failure. That is not a signal of a large cash flow. Remember.

The second point to note, in addition to Chaikin Money Flow slightly decreased, the price also decreased but not too low before.

If these two conditions are met, it proves that large cash flows are accumulating goods.

Step 3: Enter a BUY order once Chaikin Money Flow breaks outline 0. Wait for the candle to close completely

Of course, all are just clues. What we do know is not 100% certain. If you are sure, Chaikin Money Flow is the holy grail. Again, Chaikin Money Flow only provides information for us to process that information, BUY or SELL.

So, we need a final confirmation. Wait until Chaikin Money Flow breaks out to zero and the current candle is completely closed. It is a good time to place a BUY order.

Step 4: Place your stop loss where large cash flows cannot be scanned

Remember, whenever there is a chance that large cash flow will turn to sweep the stop loss again so it has the power to push prices higher. If you don't want to be a victim, don't put your stop loss too close.

Step 5: Set take profit when Chaikin Money Flow is below -0.15

Once Chaikin Money Flow has a value below -0.15, that's when big cash flows start to jump into SELL and discharge. It is also time to take profits and return to step 1, looking for SELL opportunities.

In contrast to the BUY strategy under Chaikin, we also do 5 similar steps with the SELL strategy. Here is an example

Remember, for a large cash flow to move the price, it takes time to accumulate or distribute. It is not like retail traders like we are in and out immediately. Therefore, we have enough time to go ahead of them, go with them, and not confront them. We just need to know where they're going.