Chaikin Money Flow Trade

Entry Logic

• Exact Entry Trigger: Enter long when the Chaikin Money Flow (CMF) indicator crosses above the zero line. Enter short when it crosses below the zero line.
• Confirmation: The cross should be decisive, not a brief touch.
• Timeframe: Daily.
• Market Condition: Start of a new trend, confirming accumulation or distribution.

Exit Logic

• Profit Targets: Exit when the CMF crosses back over the zero line.

Stop Loss Structure

• Hard Stop: Place stop below the most recent swing low.

Risk Management Framework

• Risk Per Trade: 1% of account capital.

Position Sizing Model

• Sizing Approach: Fixed fractional.

Trade Filtering

• Market Conditions to Avoid: Choppy markets with frequent CMF zero line crosses.

Context Framework

• Trend Direction: The CMF signal indicates the direction of money flow and potential trend.

Trade Management Rules

• Let Profits Run: Stay with the trade as long as money flow supports it.

Time Rules

• Session Notes: A swing trading signal.

Setup Classification

• A+ Setup: A CMF cross above zero is accompanied by a breakout from a long-term base on high volume.

Market Selection Criteria

• Instruments: Stocks, particularly those showing signs of institutional accumulation.

Statistical Edge Metrics

• Win Rate: 45-55%.
• Profit Factor: 1.9.
• Expectancy: 0.4R.

Failure Conditions

• Strategy Fails: In low-volume, non-trending stocks.

Psychological Rules

• Discipline: Trust the signal of institutional money flow.

Advanced Components

• Filters: Look for CMF to remain above the zero line for several bars to confirm the signal.

Location

• Strongest: At the beginning of a new trend driven by institutional activity.