Twiggs Money Flow (2024)

FAQs

How reliable is the Chaikin money flow indicator? ›

Key Points. The Chaikin money flow (CMF) indicator helps to identify trends and overbought/oversold conditions. The CMF signal tends to be more reliable in trending markets than in sideways markets. As with many technical tools, CMF is best used in conjunction with other indicators.

Chaikin Money Flow Oscillator

Positive money flow is marked by the green areas on the Chaikin money flow indicator and suggests that the trend is upward. If the indicator rises above . 20 or falls below -. 20, it could suggest that the market is overbought or oversold.

Where Chaikin Money Flow uses CLV (Close Location Value) to to evaluate volume (money flow) as bullish or as bearish, Twigs Money Flow, uses the TR (True Range). Twiggs Money Flow also relies on moving averages in its calculation while Chaikin uses cumulative volume.

Money Flow Index (MFI) is an indicator that measures the selling and buying pressure by analyzing price and volume data. The MFI indicator swings between 0 and 100. Sell when the MFI rises above 80 as it indicates an overbought condition and buy when the MFI falls below 20 as it indicates an oversold condition.

Money flow is calculated by finding the average of the closing, low, and high prices, and multiplying the result by the daily volume. Consider the example below in which money flow is negative between the first day and the second day. The above example shows a negative money flow between Day 1 and Day 2.

Typically, MFI above 80 is considered overbought and MFI below 20 is considered oversold. Strong trends can present a problem for these classic overbought and oversold levels. MFI can become overbought (>80) and prices can simply continue higher when the uptrend is strong.

The OBV and the CMF differ in the sense that the former measures are based on the difference in closing prices across multiple days, while the latter measures are based on the closing price of each trading day. It is important to note that the OBV can often produce fake signals.

Moving Average Convergence Divergence (MACD)

Often regarded as the best momentum indicator, MACD is a trend-following indicator. It represents the relationship between 2 moving averages of a financial instrument's price.

Chaikin Money Flow (CMF) is an oscillator that fluctuates between -1 and +1. Rarely, if ever, will the indicator reach these extremes. It would take 20 consecutive closes on the high (low) for 20-day Chaikin Money Flow to reach +1 (-1).

The Accumulation or Distribution line measures the money flow volume for each trading period, which serves as the basis for the Chaikin Money Flow. The formula for the A/D Line is as follows: Money Flow Multiplier = [(Close – Low) – (High – Low)] (High – Low) Money Flow Volume = Money Flow Multiplier Volume.

How do you use a WMA indicator? ›

This is done by multiplying each bar's price by a weighting factor. Because of its unique calculation, WMA will follow prices more closely than a corresponding Simple Moving Average. Use the WMA to help determine trend direction. It could be an indication to buy when prices dip near or just below the WMA.

This indicator advises day traders to trade in the direction of the smart money flow indicator at the end of the day (last half hour) because that is what smart money is currently doing. Day traders should go in the direction of dumb money at the start of the day in the stock market.

Description. The Money Flow Index (MFI) is a momentum indicator that measures the flow of money into and out of a security over a specified period of time. It is related to the Relative Strength Index (RSI) but incorporates volume, whereas the RSI only considers price.

One of the most common ways traders utilize the 50 EMA is by following the prevailing trend. Here's how it works: Uptrend Confirmation: In an uptrend, traders look for opportunities to go long (buy) when the price is above the 50 EMA. They consider it a confirmation of the bullish trend.