Chaikin money flow moves between -1 and +1, therefore Chaikin Money Flow is an oscillator. This indicator calculates the volume of selling and buying a certain period.
Like the other volume indicator, Chaikin Money Flow can not be used in trading alone. This indicator requires other indicators as a supporter. We can combine moving average with the Chaikin money flow indicators, trend indicators combine with a volume indicator.
As you can see the picture below, Chaikin indicators only show the volume level of a market instrument. We could not get a signal to sell or buy from this indicator. But if we combine it with other indicators it will be more clear.
With additional indicators such as moving averages, then we will be much easier to determine buy and sell signals. As the picture below we use moving averages combined with Chaikin money flow indicators. And the black vertical line is one example of a buy signal.
Sometimes Chaikin Money Flow is used alone. We can use it when the Chaikin Money Flow indicator crosses the 0. Sell signal if the Chaikin money flow indicator crosses down the zero line, and buy signal if Chaikin money flow indicator crosses up the zero line. You can see it in this picture below.
In the picture above shows the buy signal from Chaikin money flow indicator, even though is very difficult to do because there are a lot of false signals generate from Chaikin money flow indicator.
As you can see in the picture above, chaikin indicator moves so fast and makes false signals. With this situation is difficult for us to take action or to open trading position with this indicator alone.
0 comments:
Post a Comment
IF YOU WANT TO KNOW ANYTHING about Forex trading system, Forex indicator, Expert Advisor, etc. and you want me to write about it - YOU CAN ASK ME using comment box.