Chaikin Money Flow Indicator MT4 | MT5

The CMF Indicator on MetaTrader 4 is classified as a volume-based oscillator, developed by Marc Chaikin, that helps traders analyzing price and volume dynamics in the market for determining the buying or selling pressure. This indicator identifies potential trends, reversals and the confirmation of existing trends as well.

Furthermore, on MT5 also, traders can notice that this indicator fluctuates between -1 and +1, therefore, positive cash flow indicates the possibility of an increase in the price (bullish trend), while negative cash flow suggests that the price may fall (bearish trend).

Here below the formula of the CMF indicator:

• CMF = [ ∑ MFV over n periods ] / [ ∑ Volume over n periods ]

Where;

• MFV = MFM * Volume
• MFM = [ ( Close - Low )-( High - Close ) ] / ( High - Low )

For the trading example on MT4, at the start of the Bullish movement on the EURJPY chart, the CMF indicator signaled a buying opportunity when its line crossed the balance line from below. The continued rise of the line provided the trader with a clear visual of the trend’s strength. When the line declined, reached the zero level, and crossed it downward, it signaled a trend reversal, leading to a downtrend.

For the trading example on MT5, at the beginning of the bearish movement on the NZDCAD chart, the chaikin money flow signaled a short opportunity when its line crossed the zero level from above. The ongoing decline of the line helped the trader assess the strength of the trend. When the line moved up, turned positive, it indicated a trend reversal, transitioning into an uptrend.

For better results, it is recommended to use the CMF in combination with other technical analysis indicators such as MA, RSI and MACD to improve trade accuracy.