Dynamic Money Flow: Gap-Aware, Volume-Weighted Oscillator
Summary
Dynamic Money Flow adapts Chaikin Money Flow by incorporating gaps through true range and combining close-to-range positioning with close-to-close movement. Its flow estimate weights these components dynamically according to the close change relative to true range, or lets users set a fixed split. The indicator then smooths the result with a recursive moving average and normalizes it by similarly smoothed volume in index mode; cumulative mode instead accumulates the flow values directly.
The notes describe zero-line crosses and divergences as possible confirmation signals for breakouts and trends, and explain that moving averages can smooth the oscillator and reduce some false center crosses. Optional simulated volume derives a proxy from candle movement when reported volume is missing or unsuitable. The document gives conceptual examples, but no systematic performance tests or trading rules. Signals remain chart-analysis aids, and results depend on settings and the quality of volume data.
Key ideas
- The calculation uses true range to account for gaps that basic accumulation and distribution can miss.
- Close-to-range and close-to-close measures share volume according to a dynamic or user-set weighting.
- Index mode normalizes smoothed flow by smoothed volume, while cumulative mode sums flow over time.
- Moving averages and simulated volume are optional tools whose usefulness depends on market data and settings.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.