Forex for a trader
Accumulation distribution indicator forex

Accumulation distribution indicator forexAccumulationDistribution. AccumulationDistribution Technical Indicator is determined by the changes in price and volume. The volume acts as a weighting coefficient at the change of price — the higher the coefficient (the volume) is the greater the contribution of the price change (for this period of time) will be in the value of the indicator. In fact, this indicator is a variant of the more commonly used indicator On Balance Volume. They are both used to confirm price changes by means of measuring the respective volume of sales. When the AccumulationDistribution indicator grows, it means accumulation (buying) of a particular security, as the overwhelming share of the sales volume is related to an upward trend of prices. When the indicator drops, it means distribution (selling) of the security, as most of sales take place during the downward price movement. Divergences between the AccumulationDistribution indicator and the price of the security indicate the upcoming change of prices. As a rule, in case of such divergences, the price tendency moves in the direction in which the indicator moves. Thus, if the indicator is growing, and the price of the security is dropping, a turnaround of price should be expected. A certain share of the daily volume is added to or subtracted from the current accumulated value of the indicator. The nearer the closing price to the maximum price of the day is, the higher the added share will be. The nearer the closing price to the minimum price of the day is the greater the subtracted share will be. If the closing price is exactly in between the maximum and minimum of the day, the indicator value remains unchanged. AD(i) =((CLOSE(i) - LOW(i)) - (HIGH(i) - CLOSE(i)) * VOLUME(i) (HIGH(i) - LOW(i)) + AD(i-1) AD(i) — value of the AccumulationDistribution indicator for the current bar; CLOSE(i) — close price of the bar; LOW(i) — the lowest price of the bar; HIGH(i) — the highest price of the bar; VOLUME(i) — volume; AD(i-1) — value of the AccumulationDistribution indicator for the previous bar. Learn Forex Trading. AccumulationDistribution Forex Technical Analysis and AccumulationDistribution Forex Trading Signals.

Developed by Marc Chaikin. This indicator is used to assess the cumulative flow of money into and out of a Forex currency pair. Originally used for stocks trading, when it comes to stocks trading “volume” is the amount of shares traded in a particular stock, this volume is a direct reflection of the money that is coming into and out of a stock. The basic principle behind AD is that volume(or money flow) is a leading indicator of the price. (Volume precedes price). When it comes to the foreign exchange market-Forex, there is no central exchange for Forex trades as compared to stock trades where there is a central exchange for stocks, for example the NYSE - New York stock exchange. Since there is no true measure of volume (actual money) that is flowing into and out of a currency market, Forex brokers have come up with a substitute for the actual money volume, this substitute is known as “tick volume”. Tick volume is the measure of price changes (ticks) received by a broker during a particular trading periodinterval. The tick volume is incorporated by many Forex brokers in their charting software.

This volume indicator is used to determine if volume is increasing or decreasing as the price of a currency pair is rising or falling. If the price of a currency pair is rising then the AccumulationDistribution should also be rising. This shows that the price move is being supported by volumes and the move upwards has strength and is sustainable. If on the other hand price is moving up and the volumes are not, the strength behind the move is reducing; this creates divergence between price and indicator and warns of a possible move in the opposite direction. If the price of a currency pair is falling then the AD should also be falling. This shows that the price move is being supported by volumes and the move downwards has strength behind it. If on the other hand price is moving down and the volumes are not, the strength behind the move is reducing; this creates divergence between price and AD and warns of a possible move in the opposite direction. Forex Technical Analysis and Generating Forex Trading Signals. Below is an example of a chart and the technical analysis explanation. From the chart above we can separate the chart into three parts, part A, B and C. A - Upward trend line on chart as well as on the AccumulationDistribution.

B - Downward trend line on chart as well as on the AccumulationDistribution. C - Upward trend line on chart as well as on the AccumulationDistribution. As long as the price and the indicator are moving in the same direction then the price move has enough momentum to continue moving in that direction as shown above. From the above chart we can see that once the trend line on the AD was broken then the price trend line was also broken. Looking at the chart below we have added vertical lines to represent the points where the trend lines were broken, both on the price chart and the indicator. Comparing the trend lines on the indicator and the price those of the AD were broken before those of the chart. This is because volume always precedes price. Exit signals are generated when the trend line on the AccumulationDistribution is broken. A trend line break on the indicator warns of a possible reversal.

Once the trend line on the AD is broken it warns of a possible reversal in the direction of the market. However if we want to take a trade in the opposite direction it is always best to wait for a confirmation signal. A confirmation signal is considered complete once both the indicator and the price breaks both their trend lines. Entry Signal Generated by Trend Reversal. How to Day Trade using the Accumulation Distribution Indicator. Table of Contents. What is the Accumulation Distribution Indicator. The accumulation distribution indicator (AD) is an instrument which gives information about the money flow in a stock. The word “accumulation” refers to how much equity of the stock is bought. Contrary to this, the word “distribution” refers to how much equity of the same stock is sold. Bonus: Download the free Tradingsim day trading ebook with over 10,000 words of trading strategies and techniques you can use to trade stocks, futures and bitcoin!

In this manner, the AD is a volume based indicator. The AD is a single line tool from the oscillator family. The accumulation distribution Line (ADL) fluctuates above and below a zero (0.00) level. This is an image of an accumulation distribution oscillator. See that the line can fluctuate quite rapidly, which, is a result of the indicator reacting to the trading volumes of the security. Traders use the AD indicator to validate trade entries and exits. Accumulation Distribution Calculation. The calculation of the AD consists of three formulas - money flow multiplier (MFM), money flow volume (MFV), and ADL. The first formula involved in the calculation is the MFM: MFM = ((Close – Low) – (High – Close)) (High – Low) Then we need to calculate the MFV: MFV = MFM x Volume on the Period. Lastly, we have the ADL: ADL = Previous Period ADL + Current MFV. Let’s now walk through an example: Close = $650.00. Low = $648.00. High = $651.00. Volume on Period = 9,500. Previous Period ADL = 180,000. Let’s now add the values to the formulas: MFM = ((650 – 648) – (651 – 650)) 3. MFV = 0.3333 x 9500. ADL = 180,000 + 3,166.35. Let’s now visualize it: In other words, when you apply the parameters used in this example, this is how the ADL prints on the chart. Now see what happens if we add 10 more values to our calculation. These are the values: 184328 185123 186000 179000 175000 181000 183500 189000 194000 186000.

And now, let’s visualize it! This now looks more like the real thing, right? The point is that the AD determines these values based on the high, low, close, and volume of the respective period. In this manner, volumes and volatility are crucial for the technical performance of the tool. 4 Trading Signals Using the Accumulation Distribution. There are two basic signals created by the AD tool. These are the trend confirmation signal and divergence. ADL Trend Confirmation. The trend confirmation signal is very easy-to-understand. It also consists of two types: 1) Bullish ADL Trend Confirmation. The bullish trend confirmation signal comes when the AD line increases during high volumes.

This means that a great amount of money flow is being accumulated. This is likely to cause an increase in the price of the security. 2) Bearish ADL Trend Confirmation. The bearish trend confirmation signal comes when the AD line decreases during high volumes. This means that a great amount of money flow is being distributed. In this manner, the respective security is likely to decrease in price. These two signals are crucial for the success of the AD oscillator. Traders use them to set entry and exit points on the chart in order to hop into emerging trends and to exit in the right moment. The ADL divergence is another very important feature of the accumulationdistribution indicator. There are two types of ADL divergence based on their potential: 3) Bullish ADL Divergence.

To get a bullish ADL divergence we need to identify a couple things on the chart. The first thing you need is a bearish price action. The second thing is an increasing ADL. These create a strong bullish signal on the chart. 4) Bearish ADL Divergence. To get a bearish ADL divergence we need to identify exactly the opposite situation. The first thing you need is a bullish price action. The second thing is a decreasing ADL. These create a strong bearish signal on the chart. On Balance Volume vs. Accumulation Distribution. An indicator which is considered similar to the ADL is the On Balance Volume (OBV). This is another volume-based oscillator, which is used to measure the strength of the buying and selling forces. It pretty much looks the same way as the AD and the signals it gives are interpreted the same way. In this manner, the two tools could be combined into a trading strategy. However, the two indicators could sometimes diverge. The ADL could move upwards, while the OBV could move downwards.

So, why would the two indicators diverge if they are both volume based? The answer to this question is due to the differences in the formulas of these indicators. The ADL compares the current close with the current high and current low. The OBV compares the current close with the previous close. The potential divergence between the two tools could create a very lucrative trading opportunity. It is very important to use the trading volumes in this situation. If the volumes are high, then the price action is likely to create a big candle on the chart. But, the real question is what direction will the stock go after the divergence emerges? Well, the volume indicator could provide the answer to this question. Check out if the stock is trending first. If it is, then have a look at the volume indicator. If the volumes are high, then the trend is valid.

In this manner, the divergence between the ADL and the OBV should be traded in the direction of the trend. On Balance Volume versus Accumulation Distribution Indicator. Here we have a classic divergence between the OBV and ADL. The two lines cross creating a divergence. Fortunately, the trend is bearish and is confirmed with relatively high trading volumes. Therefore, we get a bearish signal on the chart. Accumulation Distribution Trading System with the OBV. Let’s now discuss the trading rules involved when trading with the ADL versus the On Balance Volume: ADL & OBV Trade Entry. Enter a trade when you get a matching signal between the two indicators, accompanied by higher trading volumes. This also concerns the divergence between the two indicators. You should enter an ADL OBV divergence trade, when the two indicators contradict during high volumes. In this case you enter in the direction of the trend. Make sure you always protect your trades with a stop loss order. After all, this type of investing involves volatile trading on high volumes, which in many cases happen on margin (all you day traders out there).

Well, you want to be protected in these trading scenarios. To determine the right place for your SL order, you should use the price action rules. If you are entering a long trade, you should find a support prior to the trade signal. Then you place your stop loss underneath. If you are going short, you do the exact opposite; find a resistance level established prior to the signal and place your stop order above this level. Profit Targets using the ADL and OBV. If the ADL and the OBV are increasing on high volumes, you should hold your long trade. If the ADL and the OBV are decreasing, then you should be short for the same period of time. However, if the indicators change their attitude during your trade, you need to close your trade and take your profits. Another approach is to adjust your stop when you see opposite signals on the chart.

Accumulation Distribution Strategy Example. Now let’s approach a strategy which will combine these rules into a complete trading system. Accumulation Distribution Trading Strategy. We have the 2-minute chart of Amazon from August 26, 2016. The chart starts with a range from the leftmost side. The ADL and the OBV indicators are concentrated in the upper area. Suddenly, the price begins to decrease. At the same time, the two indicators decrease as well while volumes are increasing. The decrease of the indicators gives you a short signal on the chart. The increasing volumes are used to confirm the validity of the signal. Therefore, we short AMZN. The stop loss for this trade should be placed above the last resistance prior to the price decrease. This stop loss area is highlighted with the red horizontal line on the chart. After we sell AMZN, the price begins to decrease. The drop is so strong that the stock even gaps down 4 periods after we enter the market.

In the middle of the bearish trend, the two indicators enter a range phase. We outline the levels of the range with the two black lines in the area where the indicators are plotted. At the same time, the volumes are decreasing as well. Then the two indicators start increasing and the AD line breaks the upper level of the range. At the same moment, the price action creates a bigger bullish candle. We can use this candle to exit our short trade. See that the price switches directions afterwards. Let’s now review a trading example of a divergence between the ADL and OBV indicators: On Balance Volume - Accumulation Distribution Indicator - Divergence - Trading Example. Above you see the 2-minute chart of Oracle from Aug 22, 2016. The image shows a contradiction between the accumulationdistribution and the OBV. After a drop, the price attempts to enter a bullish trend. The two indicators have been moving toward each other until they cross. The interaction (green circle) is represented by the red and the green lines in the indicator area. At the same time, the trading volumes have been increasing.

Since the price is attempting to enter a bullish trend, we trade in the bullish direction. We open a long trade right after the crossover of the two indicators. The stop of this trade should be placed below the bottom created at the beginning of the trend reversal. The location of the stop is shown with the red horizontal line. The price increase continues afterwards with increasing volumes. Suddenly, Oracle explodes in a bullish direction. The increase is rapid and is contained by only two candles. At the same time, the two indicators also increase and reach relatively high values. Then the ADL and the OBV start dropping, which is shown in the red square. While the indicators are beginning to fall, the volume also has a dramatic drop. This is the signal we were waiting on for confirmation to exit our trade. AccumulationDistribution Indicator. The AccumulationDistribution Volume indicator (AD) is an oscillator to measure price change based the volume, which is a weighting coefficient of price. Higher the volume, higher the coefficient is thus giving more weight to the price change. The accumulationdistribution is an oscillator and is used to confirm price changes (based on volume) and works similar to the On Balance Volume indicator.

When the AccumulationDistribution indicator rises , it indicates a rise in buying or accumulation and when the AccumulationDistribution indicator declines, it points to a period of falling prices. There are no additional settings for this indicator. It can be commonly used to spot divergences between price to identify weakening trends and momentum. The accumulationdistribution indicator and gives insights into the bulls and bears commitment which is spotted by the divergences that are formed. While the indicator is used in the forex markets, it is a better gauge when applied to equities as the volume is more accurate compared to the volumes in forex. Accumulation-Distribution Indicator Explained. Definition of the Accumulation-Distribution Indicator. The AccumulationDistribution (AD) indicator is a volume indicator which factors changes in price and volume together in calculating the future price of an asset. The principle behind this is that changes in price and increase of volume of trade activity by buyers and sellers will provide a confirmation of market momentum in a price action direction. The direction will be determined by whether the sellers or buyers are the ones pushing price and volume. The AD indicator works like the Stochastics oscillator to which a volume component has been added.

This means that if the security closes near its high, the volume multiplier will have a greater effect than if the security closes nearer to its low. Usually a rising AccumulationDistribution indicator is an indication that buyers are the traders driving the price movement, leading to an accumulation of the asset. When the AD value is decreasing, this is indicative of more action on the part of sellers, driving down the market as the asset is distributed. The indicator was created by Marc Chaikin, who assigned the indicator the name Cumulative Money Flow Line. This is because the indicator was programmed to measure the cumulative flow of money into and out of an asset. Components of the Accumulation-Distribution Indicator. The AD indicator is made up of the following components: Overbought zone Oversold zone AD Line, which is a measure of the volume of money flow for each time period under consideration. Indicator Settings. The indicator is listed on the MT4 among the Oscillator indicators. To attach it to the MT4 chart, click on Insert -> Indicators -> Volumes -> AccumulationDistribution. The indicator’s appearance can be modified using the Ctrl + I function, to increase or reduce the line thickness of the indicator line or change its colour to improve visibility. Usage of the Accumulation-Distribution Indicator in Forex Trading. The AccumulationDistribution indicator can show divergence from price action, therefore it is possible to use this as part of a divergence trade strategy. The divergence should be more accurate than that of the Stochastics, since the volume of trade by either buyers or sellers is factored into the calculation. Apart from the divergence trade, the other use of the AD indicator is to confirm the trend of the underlying asset, since the volume and direction of the AD line is a clear indication of who is in control in the market: buyers or sellers.

1) Trend Confirmation Indicator. Trend confirmation is very straightforward. When you see the AD line in the indicator window rising, this means that the trend is up. When the indicator window shows a falling AD line, the trend is down. But how exactly do you use this information as a trader? The chart above explains it all. You trade trend breaks and trend bounces. This example is that of a trend break. The blue trend line connects the price lows in an uptrend. You can therefore trade the downside break of this trend line using the change in direction of the AD line to confirm the entry. 2) Divergence Trading. Divergence trading is something that you can do with the AD indicator. Divergences are areas where the peaks and troughs of price action deviate from those seen with the AD indicator.

A bullish divergence is seen where price makes a lower low but AD line forms a higher low. A bearish divergence is seen when price forms a higher high but AD line makes a lower high. In both cases, price is expected to correct the divergence in the indicator’s direction. Divergences must be confirmed, and trade entry points must have sound technical basis. A support or resistance break on the charts confirms a divergence trade as well as a candlestick pattern. Trade Example. We will demonstrate the divergence trade in our trade example. In this snapshot, we see the AD indicator forming lower highs while price action is forming higher highs. The divergence is a bearish divergence, since we expect price action to correct to the downside to match the indicator. We see the divergence play out as expected, The double candlestick pattern at the divergence area supported the downside move. The trader therefore should open the trade at the open of the next candle. The exit point for the trade is when the AD indicator has hit the oversold area. Conclusion. It is essential that you practice how to trade each setup on a demo account before using the indicator to trade real money.

Also pay attention to risk management. US Search Mobile Web. Welcome to the Yahoo Search forum! We’d love to hear your ideas on how to improve Yahoo Search . The Yahoo product feedback forum now requires a valid Yahoo ID and password to participate. You are now required to sign-in using your Yahoo email account in order to provide us with feedback and to submit votes and comments to existing ideas. If you do not have a Yahoo ID or the password to your Yahoo ID, please sign-up for a new account. If you have a valid Yahoo ID and password, follow these steps if you would like to remove your posts, comments, votes, andor profile from the Yahoo product feedback forum. AccumulationDistribution. What is 'AccumulationDistribution' Accumulationdistribution is a momentum indicator that attempts to gauge supply and demand by determining whether investors are generally "accumulating," or buying, or "distributing," or selling, a certain stock by identifying divergences between stock price and volume flow. The accumulationdistribution is calculated by first calculating the money flow multiplier, and then multiplying the money flow multiplier by the period's volume. Money Flow Index - MFI. BREAKING DOWN 'AccumulationDistribution' After the money flow multiplier is calculated, the money flow volume, or the accumulationdistribution, is calculated by multiplying the money flow multiplier by the volume for the period. The accumulationdistribution line is then calculated by summing the previous period's accumulationdistribution and the current period's money flow volume. The accumulationdistribution line may be used as an indicator to confirm whether a security is trending. If a security is in a strong downtrend or uptrend, the accumulationdistribution likely follows the direction of the price movements, and therefore, confirms the downtrend or uptrend. If the accumulationdistribution line and a security's price are diverging, it may be a bullish or bearish signal.

If a security's price is in a downtrend while the accumulationdistribution line is in an uptrend, the indicator shows there may be buying pressure and the security's price may reverse. Consequently, the security may reverse and trend up. Conversely, if a security's price is in an uptrend while the accumulationdistribution line is in a downtrend, the indicator shows there may be selling pressure, or high distribution. This may cause the security's price to reverse and turn into a downtrend. For example, many up days occurring with high volume in a downtrend could signal the demand for the underlying is starting to increase. In practice, this indicator is used to find situations in which the indicator is heading in the opposite direction as the price. Once this divergence is identified, the trader waits to confirm the reversal and makes his transaction decisions using other technical indicators. Although the accumulationdistribution line helps to determine a security's trend, the indicator does not take into account price gaps that may occur. Accumulation Distribution Forex Indicator. Accumulation Distribution Forex Indicator. Table of Contents. Accumulation Distribution Forex Indicator AccumulationDistribution Technical Indicator is determined by the changes in price and volume. The volume acts as a weighting coefficient at the change of price — the higher the coefficient (the volume) is, the greater the contribution of the price change (for this period of time) will be in the value of the indicator. In fact, this indicator is a variant of the more commonly used indicator On Balance Volume. They are both used to confirm price changes by means of measuring the respective volume of sales. When the AccumulationDistribution indicator grows, it means accumulation (buying) of a particular security, as the overwhelming share of the sales volume is related to an upward trend of prices.

When the indicator drops, it means distribution (selling) of the security, as most of sales take place during the downward price movement. Divergences between the AccumulationDistribution indicator and the price of the security indicate the upcoming change of prices. As a rule, in case of such divergences, the price tendency moves in the direction in which the indicator moves. Thus, if the indicator is growing, and the price of the security is dropping, a turnaround of price should be expected. A certain share of the daily volume is added to or subtracted from the current accumulated value of the indicator. The nearer the closing price to the maximum price of the day is, the higher the added share will be. The nearer the closing price to the minimum price of the day is, the greater the subtracted share will be. If the closing price is exactly in between the maximum and minimum of the day, the indicator value remains unchanged. AD(i) =((CLOSE(i) – LOW(i)) – (HIGH(i) – CLOSE(i)) * VOLUME(i) (HIGH(i) – LOW(i)) + AD(i-1) Where: AD(i) — importance of the Indicator of the AccumulationDistribution for the current bar; CLOSE(i) — the price of the closing the bar; LOW(i) — the minimum price of the bar; HIGH(i) — the maximum price of the bar; VOLUME(i) — volume; AD(i-1) — importance of the Indicator of the AccumulationDistribution for previous bar. Technical Indicator Description. AccumulationDistribution Technical Indicator is determined by the changes in price and volume. The volume acts as a weighting coefficient at the change of price — the higher the coefficient (the volume) is the greater the contribution of the price change (for this period of time) will be in the value of the indicator. In fact, this indicator is a variant of the more commonly used indicator On Balance Volume.

They are both used to confirm price changes by means of measuring the respective volume of sales. When the AccumulationDistribution indicator grows, it means accumulation (buying) of a particular security, as the overwhelming share of the sales volume is related to an upward trend of prices. When the indicator drops, it means distribution (selling) of the security, as most of sales take place during the downward price movement. Divergences between the AccumulationDistribution indicator and the price of the security indicate the upcoming change of prices. As a rule, in case of such divergences, the price tendency moves in the direction in which the indicator moves. Thus, if the indicator is growing, and the price of the security is dropping, a turnaround of price should be expected. Accumulation Distribution Forex Indicator sell signal. Accumulation Distribution Forex Indicator buy signal. What does Forex Indicator mean? A forex indicator is a statistical tool that currency traders use to make judgements about the direction of a currency pair’s price action.

Forex indicators come in many types, including leading indicators, lagging indicators, confirming indicators and so on. Popular forex indicators include moving averages, relative strength index (RSI) and average true range (ATR). A forex trader must choose the indicators that fit his or her trading strategy. Forex Metatrader 4 Trading Platform: Free $30 To Start Trading Instantly No Deposit Required Automatically Credited To Your Account No Hidden Terms. How to install Accumulation Distribution Forex Indicator? Download Accumulation Distribution Forex Indicator. zip Copy mq4 and ex4 files to your Metatrader Directory experts indicators Copy tpl file (Template) to your Metatrader Directory templates Start or restart your Metatrader Client Select Chart and Timeframe where you want to test your forex indicator Load indicator on your chart. How to uninstall Accumulation Distribution Forex Indicator? To shut down an indicator, one has to remove it from the chart. At that, its drawing and recalculation of its values will stop. To remove an indicator from the chart, one has to execute its context menu commands of “Delete Indicator” or “Delete Indicator Window”, or the chart context menu command of “Indicators List – Delete”.

Download Free Accumulation Distribution Forex Indicator. AccumulationDistribution (AD), How To Use. How To Use AccumulationDistribution (AD) AccumulationDistribution is a price and volume indicator that was developed by Larry Williams; the designer of many Technical Analysis tools such as the Williams %R indicator. The AccumulationDistribution indicator is used to determine if market sentiment is either buyer or seller oriented by analyzing the position of the indicator against that of price. The AD indicator is, in fact, a variant of the popular ‘On Balance Volume’ indicato. If the AD indictor is rising with relation to the price then this implies that the commodity or security, of interest, is being accumulated or bought. In contrast, a falling AD reading indicates a sellers’ market epitomized by commodity distribution. Larry Williams designed his indicator so that when divergences begin to emerge between the AD and price then this is indicative that a change in the price direction could occur soon – see diagram. To optimize the use of the AccumulationDistribution indicator, its following key features need to be understood. Williams’s studies eventually concluded that the easiest method of determining accumulation was by defining buying pressure as the price movement from the day’s low to its close. Likewise, distribution could best be considered as the selling pressure denoted by the price movement from the day’s high to its clo. In simple terms, Williams then calculated the value of the AD indicator by subtracting the Accumulation from the Distribution; then multiplying this result by sales volume and then dividing that value by the price movement from its lowest to highest point during the selected trade period.

From his research, Williams showed that an indicator calculated in such a way prompted buying when it was at its lowest points and selling whilst at its peaks. As already stated, when the AD indicator rises, then the driving force behind the market are the buyers of the commodity or security whilst if the AD indicator falls then the sellers are the dominate force. The most important feature that the user must grasp concerning the AD indicator is that when discrepancies emerge between its readings and price action, then the current price direction is very likely about to reverse. For instance, if the price is falling and the AD indicator has started to rise, this usually signals that a reversal in price action is imminent. Williams’s research also showed that, in the majority of cases, price action had a predominant tendency to move in the direction of the AccumulationDistribution indicator. The AD indicator is defined by fluctuations of price and volume. Williams used volume to act as a weighting factor with regards to predicting price change. In particular, larger volumes produce a higher probability that a price direction could turnabout in the very near future. In conclusion, the AccumulationDistribution Indictor is best deployed to provide advance notice of possible changes in the price direction of the commodity, security or investment, of interest. Accumulation Distribution Indicator. This indicator was developed by Marc Chaikin based on the following works: "On Balance Volume" – indicator introduced by Joe Granvill; "AccumulationDistribution" index by Bill Willam.

In measurement formula for Joe Granville indicator, close prices compared with the purpose of adding or deducting of volume, whereas Williams' indicator open and close prices are compared. Marc Chaikin compares close prices with the middle of range from minimum to maximum. The history of indicator is interesting on its own. In Larry Williams formula, Chaikin substituted open price for price of range. The reason of change was not that he considered it wrong, but that he was not able to find data on prices of opening. That time prices were taken from daily papers, which, due to some reason, stopped publishing prices of opening. Originally, this indicator served measuring of price flow. Its also underlies in the basis of Chaikin Oscillator. Measurement of AccumulationDistribution indicator: Close – close price. Low – minimal price. High – maximum price.

Volume – volume. ADn – value on current candle. ADn-1 – value of current price. When currency is closed on the highest level within trading range, value will be equal to 1; When contract closes above the middle point (closer to maximum), the range between zero and one will be multiplied into volume; When contract closes in the middle between lowest and highest points, the value is one; If closure is below the middle point (closer to minimum), then negative range between zero and minus one will be multiplied into volume; When contract closes on the lowest point, then volume multiplied into value will be minus one.



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