When the Accumulation / Distribution
This indicator is a more complex version of the On Balance Volume. It is used to determine the current price and volume changes, on the basis of making a prediction of future price movements. The original mission was to determine the indicator of cash flow, which was sent to the action, but later it became effectively applied in the forex market. The same indicator Accumulation / Distribution indicator serves as a basis Chaikin.
Description of indicator:
Market situation. On the continuation of the day dominated upward trend . As the process advances, closer to the top, more and more traders to make deals. Thus, the volume of trading in financial instruments increases, which causes the fall trend. Accordingly, when a downtrend is the opposite movement. On this basis, the indicator shows what financial forces behind the current market trend.
This indicator has been created for use in the stock markets, which have volumes. How many of the forex market volume does not exist, replaced by a "tick" in the calculation of the volume and to use them.
The use of the indicator:
This indicator is often used to confirm the presence and strength of a trend. If the trend is up, it must grow and LED indicator, respectively, if the trend is down, then the indicator line should fall. In this case, the peaks and troughs of the uptrend downtrend should coincide with the peaks and lows indicator. If these conditions are satisfied, then in force, and the trend can be no doubt. When the trend and performance indicators aimed in different directions, it is a sign of a weak trend that will soon be moving towards the indicator moves. For example, the trend is up, but the LED indicator is reduced, in this case, the growth trend is not confirmed by volume, and the trend is weak.
Significant advantage for the trader to forecast volumes (and based on the volume and price forecasting) is the ability to use shapes and patterns of graphical analysis. To schedule the volume indicator, you can use different shapes, which will give the same result as in the chart. Head and shoulders, channels, diamond, triangle, wedge - and this is not a complete list of figures, you can use the graph of the indicator.
Disadvantages indicator:
Big drawback of this indicator is that the indicator does not take into account the gaps. There are situations or times when the price chart has many gaps, this time better performance indicator is not considered when forecasting. When the indicator is doing the calculations, the gaps greatly affect the rate.
Significant drawback of the indicator is slightly noticeable change in volume. For example, the downward trend is close to the minimum value and loses its force, and the indicator is unnoticed until then, when the light will unfold in the opposite direction.
LED repetitive strain assets, so it happens that he misses market differences.
PS Gap (gap) - the gap between two adjacent bars or candlesticks, which are seen in the personal chart. Gap is direct evidence that the rate of price depends on time. Just find a gap gap between closing price and the opening price the next day.