In a simple word, the Mainly Accumulation/Distribution indicator helps you to know the demand and supply of shares.
We all know if demand created price will automatically grow. And if supply increase too much than demand then price will decrease.
A similar thing happened to the stock market, when more buyers want the buy stock and compare it to the seller then share price automatically increases. And when more seller wants to sell stock compare to buyers then share price automatically decrease.
Accumulation/Distribution indicator Setting
Go to indicator search section> search for Accumulation/Distribution
let’s discuss options:
Volume: if you check this volume option then A/D line will include volume in A/D line. Means
When share price and Volume Increasing too much then A/D line will increase too much.
When share price increasing and volume not Increasing then A/D line will not increase too much.
When share price increasing and volume decreasing then A/D line will may not increase that much.
If volume Increasing and share price flat then this indicator will increase a little bit. just because of volume Increasing.
If the volume decreasing and share price flat then this Indicator line can decrease a little bit. Just because of volume decreases.
Result: this is the color setting of the A/D indicator line. by default it’s black.
Accumulation/distribution indicator trading strategy
- If the share price is gaining and A/D indicator in the downtrend. this is the sign that more sellers than buyers and share prices may fall.
- If share price in falling and Accumulation/Distribution indicator in an uptrend, this is the sign that more buyers than sellers and share price can go upward.
- if you check volume in setting option then A/D indicator Line multiple with volume. Then A/D Indicator line movement will depend on volume. Means Increasing or decreasing volume can effect this indicator movement.
- Similarly, if you uncheck volume option then changing the volume will not effect the A/D indicator movement.
Accumulation/Distribution indicator used to show you the trader’s positions. this means how accumulation means buying and distribution means selling. so this will indicate how much buying and selling happening in the stock.
more buying means more demand and more selling means more supply. and the price will increase or decrease base on demand and supply chain.
more demand means more price gain. more supply means share price can fall. this is a simple process.
*Read Related Post for more information