Accumulation/Distribution Technical Indicator
Accumulation/Distribution 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 Accumulation/Distribution 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 Accumulation/Distribution
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.
Calculation:
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.
A/D(i) =((CLOSE(i) - LOW(i)) - (HIGH(i) - CLOSE(i)) * VOLUME(i) / (HIGH(i) - LOW(i)) + A/D(i-1)
Where:
A/D(i) — importance of the Indicator of the Accumulation/Distribution 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;
A/D(i-1) — importance of the Indicator of the Accumulation/Distribution for previous bar.
Source Code
Full MQL4 source of Accumulation/Distribution Technical Indicator is available in the Code Base: Accumulation/Distribution Technical Indicator
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Technical Indicators
