V.18:8 (42-46):Chaikin's Money Flow by Christopher Narcouzi
Product Description
Chaikin's
Money Flow by Christopher Narcouzi
An indicator combining price and volume could spotlight buying and selling, and Chaikin's money flow is such an indicator. Use it with basic charting techniques to increase your chances of success.
Most momentum measurements and oscillators use only price in their calculations. To use several such indicators is essentially redundant, since they tend to be highly correlated; another indicator should be considered, one that is not highly correlated with momentum and oscillators. Trader and analyst Marc Chaikin’s money flow fits the bill. It uses price and volume to give you a look at what is going on under the surface of the price action. It gives you a picture of the supply/demand situation and shows you whether the stock is under accumulation or distribution. I use this indicator to confirm breakouts from chart patterns.
DEFINITION
Chaikin’s money flow is based on Chaikin’s accumulation/distribution. Accumulation/distribution, in turn, is based on the premise that if the stock closes above its midpoint [(high+low)/2] for the day, then there was accumulation that day, and if it closes below its midpoint, then there was distribution that day. Chaikin's money flow is calculated by summing the values of accumulation/distribution for 21 periods and then dividing by the 21-period sum of the volume.
An indicator combining price and volume could spotlight buying and selling, and Chaikin's money flow is such an indicator. Use it with basic charting techniques to increase your chances of success.
Most momentum measurements and oscillators use only price in their calculations. To use several such indicators is essentially redundant, since they tend to be highly correlated; another indicator should be considered, one that is not highly correlated with momentum and oscillators. Trader and analyst Marc Chaikin’s money flow fits the bill. It uses price and volume to give you a look at what is going on under the surface of the price action. It gives you a picture of the supply/demand situation and shows you whether the stock is under accumulation or distribution. I use this indicator to confirm breakouts from chart patterns.
DEFINITION
Chaikin’s money flow is based on Chaikin’s accumulation/distribution. Accumulation/distribution, in turn, is based on the premise that if the stock closes above its midpoint [(high+low)/2] for the day, then there was accumulation that day, and if it closes below its midpoint, then there was distribution that day. Chaikin's money flow is calculated by summing the values of accumulation/distribution for 21 periods and then dividing by the 21-period sum of the volume.
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