Twiggs Money Flow: the fix for Chaikin Money Flow’s gap problem

What it measures

Twiggs Money Flow is a refinement of Chaikin Money Flow that replaces the bar’s own high-low range with the true range, and replaces the simple sum with Wilder-style smoothing.

Both changes address the same weakness: Chaikin ignores gaps entirely, so on a market that opens away from the previous close it measures the wrong range and mis-weights the bar.

The practical consequence is that Twiggs behaves like a regime reading rather than an oscillator. Where Chaikin will cross zero several times during a single consolidation, Twiggs usually stays on one side of it until the balance of the auction actually changes, which is the question it was built to answer.

How it is calculated

These are the steps Basis performs, verified against the published definition.

1. 1

   Compute the true range for each bar, which extends the high-low span to include any gap from the previous close.

2. 2

   Compute the close location value against that true range rather than the raw range.

3. 3

   Multiply by volume, then smooth both the money-flow series and the volume series with Wilder’s method rather than summing them.

4. 4

   Divide the smoothed flow by the smoothed volume.

Settings

Twenty-one periods is the common setting. Because the smoothing is exponential rather than a window, the period controls the decay rate rather than a hard lookback — an old bar never fully leaves the calculation, it only stops mattering. Shortening it does not make the indicator see less history, it makes recent history dominate faster, which is a different change from shortening a summed window and is why Twiggs settings do not translate directly from Chaikin ones.

How to read it

• Read it the same way as Chaikin Money Flow — sustained sign indicates accumulation or distribution — but expect a smoother line with fewer zero crossings.
• The smoothing means it lags Chaikin slightly and whipsaws considerably less.
• It is most useful on instruments that gap, which in crypto means anything with thin overnight liquidity rather than the majors.
• A sign change that holds for several bars is worth more than the magnitude, which compresses toward zero as the smoothing window fills.

Where it misleads

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