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Andy,
The formula from Traders Online which was supposedly written by Equis
is:
{Chaikin Money Flow Indicator}
sum((((C-L)-(H-C))/(H-L))*V,21) / sum(V,21);
If you look at the formula closely what you see is that we are
multiplying ((C-L)-(H-C))/(H-L) by volume and then dividing by the same
volume. What you are left with is the close in relationship to the
trading range multiplied by one.
Compare these two indicators:
(C*V)/V;
C;
The outputs will be identical.
We can safely say then that volume doesn't have an effect.
The price of the stock shouldn't have an effect either,since we are
looking at the high, low, and close for the day.
Gaps, will have a major effect on the range verses the previous range
and would move the indicator based on the value of the new range.
This indicator is all about the close in relationship to the range.
Hope this helps,
Preston
--- In equismetastock@xxxxxxxxxxxxxxx, "metastkuser"
<andysmith_999@xxx> wrote:
>
> Are there any cases where CMF is inaccurate (low volume stocks, stocks
> under $10 etc.)?
>
> The only case I know is when there is a gap up or down, the CMF gets
> skewed since the midpoint is affected.
>
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