Chaikin Money Flow Oscillator
factor.formula
Middle Price (Money Flow Volume, MV):
Money Flow Accumulation (MFA):
Chaikin Money Flow Oscillator (CMO):
default value:
in:
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The middle price (Money Flow Volume) on day t is the volume-weighted price fluctuation of the day. The closer the closing price is to the high point of the day, the more positive this value is; conversely, the closer the closing price is to the low point of the day, the more negative this value is.
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The cumulative middle price on day t (Money Flow Accumulation) is the sum of all middle prices from the beginning to day t.
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The trading volume on day t.
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Closing price on day t.
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The highest price on day t.
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The lowest price on day t.
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Exponential Moving Average, EMA(X, N) represents the exponential moving average of variable X with a period of N. Compared with the simple moving average, EMA gives higher weight to recent data and is more sensitive to price changes.
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EMA parameter with a longer period, usually used to smooth data, the default value is 10. A larger N1 value will make the indicator less sensitive to price changes and smoother.
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A shorter period EMA parameter, usually used to capture momentum, with a default value of 3. A smaller N2 value will make the indicator more sensitive to price changes and more volatile.
factor.explanation
The Chaikin Money Flow Oscillator (CMO) is a momentum indicator developed by Marc Chaikin to measure the strength of money inflows and outflows. It is an improvement on the AD Line, calculated by calculating the cumulative value (Money Flow Accumulation, MFA) of the middle price (Money Flow Volume, MV), and then taking the difference between two exponential moving averages (EMA) of different periods of the MFA. The CMO indicator is designed to identify potential price reversals. When the CMO curve rises rapidly, it may indicate that buying power is increasing. Conversely, when the CMO curve falls rapidly, it may indicate that selling power is increasing. The indicator is often used in conjunction with the moving average of the stock price to improve the accuracy of trading signals. For example, when the stock price is above its 90-day moving average and the CMO indicator turns from negative to positive, this may be considered a buy signal; conversely, when the stock price is below its 90-day moving average and the CMO indicator turns from positive to negative, it may be considered a sell signal. It should be noted that the CMO indicator cannot be used alone. It needs to be combined with other technical analysis tools and market conditions for comprehensive analysis to improve the reliability of trading decisions.