Chaikin Money Flow (CMF) Forex Trading Strategy

The Chaikin Money Flow (CMF) forex trading strategy is built around the concept of merging volume and price in order to in a bid to define trends.

The strategy combines the CMF_v1 custom indicator and the Doda-BBands.ex4 MT4 indicator.

Chart Setup

MetaTrader4 Indicators: Doda-BBands.ex4 (default setting), CMF_v1.ex4 (default setting)

Preferred Time Frame(s): 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, Daily

Recommended Trading Sessions: Any

Currency Pairs: Any

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Download the Chaikin Money Flow (CMF) Forex Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy in the market if the following rules hold sway:

  1. If the red line of the CMF_v1 custom indicator breaks above the 0.0000 level, it signals a positive value, which in turn translates into a bullish alert i.e. signs of buying pressure is being depicted.
  2. If the RoyalBlue dotted line of the Doda-BBands.ex4 custom indicator forms below price bars, it is a trigger to go long on the pair of interest. Please refer to Fig. 1.0.

Stop Loss for Buy Entry: Place stop loss below support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit on position if the following chart or indicator pattern gets on display:

  1. If the red line of the CMF_v1 custom indicator breaks below the 0.0000 level, it indicates resumption of selling pressures and as such an exit or take profit is advised.
  2. If the Doda-BBands.ex4 custom indicator realigns itself upwards above price bars and its color changes to red, it is a trigger to exit or take profit accordingly.

Sell Entry Rules

Place a sell order if the following conditions or rules are true:

  1. If the red line of the CMF_v1 custom indicator breaks below the 0.0000 level, it signals a negative CMF_v1 value, which in turn translates into a bearish trend i.e. signs of selling pressure is being shown.
  2. If the red dotted line of the Doda-BBands.ex4 custom indicator forms above price bars, it is a trigger to go short on the pair of interest. Please refer to Fig. 1.1.

Stop Loss for Sell Entry: Place stop loss above resistance.

Exit Strategy/Take Profit for Sell Entry:

Exit or take profit if the following indicator or chart pattern gets displayed:

  1. If the red line of the CMF_v1 custom indicator breaks above the 0.0000 level, it indicates the resumption of buying pressures and as such an exit or take profit is advised.
  2. If the Doda-BBands.ex4 custom indicator realigns itself downwards below price bars and its color changes to RoyalBlue, it is a trigger to exit or take profit accordingly.

Fig. 1.1

Free Download

Download the Chaikin Money Flow (CMF) Forex Strategy

About The Trading Indicators

The CMF_v1 custom indicator was developed by Marc Chaikin, as the Chaikin Money Flow and it gauges the amount of Money Flow Volume over a defined time period.

The CMF_v1 custom indicator forms the basis for the Accumulation Distribution Line.

The default CMF_v1 period is 21 day. When the CMF_v1 line is above zero it denotes a bullish signal, while it is a bearish signal when it is below zero.

The Doda-BBands.ex4 indicator is the modified version of Bollinger band and generates buy and sell signals based on this premise.

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