The Twiggs Money Flow was created by Colin Twiggs and is a derivative of the Chaikin Money Flow indicator. Twiggs Money Flow signals breakouts and provides useful trend confirmation.
The Twiggs Money Flow is based on the observation that buying support is normally signaled by increased volume and frequent closes in the top half of the daily range. Likewise, selling pressure is evidenced by increased volume and frequent closes in the lower half of the daily range.
The Twiggs Money Flow makes two basic improvements to the Chaikin Money Flow formula:
– To handle gaps, the Twiggs Money Flow uses true range, rather than daily Highs minus Lows.
– Rather than use a simple-moving-average-type formula, Twiggs Money Flow applies exponential smoothing, using the method employed by Welles Wilder for many of his indicators.<< Back to Glossary Index