CMF Overview

Chaikin Money Flow (CMF) measures the volume-weighted average of accumulation/distribution over n periods, oscillating between -1 and +1. Positive CMF indicates buying pressure (money flowing in), negative indicates selling pressure (money flowing out).

CMF combines price position within the bar (close relative to high-low range) with volume — when price closes near the high on heavy volume, CMF rises (accumulation). Near the low on heavy volume, CMF falls (distribution).

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How Chaikin Money Flow Works

Core Concept

1. Calculate CMF from price and volume data
2. Apply smoothing to reduce noise
3. Compare to zero line for direction, signal line for timing

Key Characteristics:

• Volume-Price Indicator = Combines price and volume for conviction measurement
• Zero-Line Reference = Positive = buying pressure, Negative = selling pressure
• Threshold-based = Zero-line crosses for direction

Visual Interpretation

CMF Behavior:

• Positive values indicate buying pressure / accumulation
• Negative values indicate selling pressure / distribution
• Zero-line crossovers signal shifts in volume trend

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Trading Signals Available on Reversion

These are the signal names you select when configuring CMF in the algorithm builder or via the MCP agent:

Signal	Triggers When	Typical Use
cmf_above_zero	CMF is positive (buying pressure > selling pressure)	Bullish money flow — accumulation
cmf_below_zero	CMF is negative (selling pressure > buying pressure)	Bearish money flow — distribution

Display: Separate pane

Category: Volume

Threshold range: -1 – +1

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Key Characteristics

Strengths

What Chaikin Money Flow Does Well:

• Volume Context: Adds volume confirmation that price-only indicators lack
• Buying/Selling Pressure: Directly measures accumulation vs distribution
• Trend Confirmation: Volume trend aligning with price trend = strong conviction

Limitations

What to Watch Out For:

• Requires Volume Data: Only works with reliable volume information
• Lagging: Smoothing introduces delay in signals
• False Signals in Low Volume: Unreliable during low-activity periods

Best Use Cases

When to Use Chaikin Money Flow:

• Volume Confirmation: Confirm price breakouts with CMF direction
• Divergence Detection: Price making new highs with declining volume momentum = warning

When NOT to Use Chaikin Money Flow:

• Low-Volume Assets: Unreliable volume data produces false signals
• Without Price Context: Volume indicators should confirm price signals, not replace them

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Note

Pro Tip: Use CMF as a confirmation layer — when price breaks out and CMF confirms with a zero-line cross or signal line crossover, the move has volume conviction. Divergences (price up but CMF declining) are powerful warning signals that the move may fail.