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Introduction Developed by Marc Chaikin, the Chaikin Oscillator measures the momentum of the Accumulation Distribution Line using the MACD formula . This makes it an indicator of an indicator. The Chaikin Oscillator is the difference between the 3-day EMA of the Accumulation Distribution Line and the 10-day EMA of the Accumulation Distribution Line. Like other momentum indicators, this indicator is designed to anticipate directional changes in the Accumulation Distribution Line by measuring the momentum behind the movements. A momentum change is the first step to a trend change.
Introduction Developed by Marc Chaikin, the Accumulation Distribution Line is a volume-based indicator designed to measure the cumulative flow of money into and out of a security. Chaikin originally referred to the indicator as the Cumulative Money Flow Line.
Introduction to the Sharpe Ratio The Sharpe Ratio is commonly used by hedge funds, mutual funds, managed futures funds, and other money managers as a standardized way of reporting the level of risk the fund is using to achieve its returns. It can also be thought of as 'reward per unit of risk' or 'reward-to-volatility-ratio. William Sharpe, along with Harry Markowitz and Merton Miller, all shared a Nobel Prize in Economics for introducing and extending the Capital Asset Pricing Model (CAPM).