Trading Tips

In Episode 37, we looked at the concept of Accumulation/Distribution. Now that you’ve had time to digest those lessons, we’re ready to take things to the next level with Chaikin Money Flow (CMF).

What is Chaikin Money Flow? It’s a statistic invented by the legendary Mark Chaikin. The formula takes the cumulative total of x days worth of Accumulation/Distribution line values, and divides THAT sum by the sum of x days worth of volume numbers. This gives a moving average of volume-adjusted Accumulation/Distribution values, which provides more accuracy than just a single day’s line value by itself.

But how do you use CMF? And where can you find the data? Those questions, and more, are answered in this episode.

In this episode, you’ll learn:

- All about Accumulation/Distribution — again — in this concise but informative review (0:32)

- Exactly how CMF is calculated and what a particular result, positive or negative, means (1:29)

- Three sure-fire signs of accumulation in a stocks — which can be applied in reverse for signs of distribution (1:59)

- How and where to find customizable CMF underlays to use on your charts (2:52)

We also take an in-depth look at a real stock chart with a CMF underlay, and show you exactly how you can apply CMF studies to your own charts, with sample screen shots.

CMF is a non-trend following volume indicator. It measures buying or selling pressure. In order to increase CMF’s predictive power, it must be used in conjunction with other technical indicators. Which ones? Watch this episode to find out!

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

P.S. Next week I’ll show you how to trade the Triple Bottom chart formation, a long-term bullish reversal pattern. See you next week!

Episode 42 - The Chaikin Money Flow indicator

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