Accumulation Distribution MT4 Indicator Signals

Created by Marc Chaikin

This MetaTrader 4 Indicator is used to assess the cumulative flow of money into and out of a Forex currency pair.

Originally used for stock trading, when it comes to stocks "volume" is the amount of shares traded in a particular stock, this volume is a direct reflection of the money that's coming into & out of a stock.

The basic principle behind AD is that volume(or money flow) is a leading MT4 Indicator of the price. (Volume precedes price).

In the forex market-Forex, there's no central exchange for trades as compared to stocks trades where there a central exchange for stocks, for example the NYSE- New York stocks exchange.

Since there no true measure of volume (actual money) that's flowing into & out of a currency market, online brokers have developed a substitute for the actual money volume, this substitute is referred to as "tick volume".

Tick volume is the measure of price changes (ticks) received by a online broker during a particular period/interval. The tick volume is incorporated by many brokers in their charting software.

Interpretation

This volume MT4 Indicator is used to determine if volume is increasing or decreasing as the price of a currency pair is rising or falling.

UpTrend

If the price of a forex pair is rising then the Ac Dc should also be rising. This displays that the market price move is being supported by volumes & the move upwards has strength and is sustainable.

If on the other hand price is moving up and the volumes are not, the momentum behind this move is waning: this develops divergence between price and MT4 Indicator and warns of a possible move in opposite trend direction.

DownTrend

If the price of a currency pair is falling then the AD should also be falling. This displays that the market price move is being supported by volumes & the move downwards has strength behind it.

If on the other hand price is moving down and the volumes are not, the momentum behind this move is waning: this develops divergence between price & AD & warns of a possible move in opposite trend direction.

MT4 Indicator and How to Generate Signals

Shown Below is example of a chart and the MT4 Indicator explanation

Accumulation/Distribution Indicator MT4 Indicator - Is Accumulation/Distribution Forex a Leading or Lagging Indicator

From the chart above we can separate the chart into three parts, part A, B & C.

A - Upwards trend line on chart as well as on the Ac Dc

B - Downwards trendline on chart as well as on the Accumulation Distribution

C - Upward trend line on chart as well as on the Ac Dc

As long as the price and the MT4 Indicator are moving in the same direction then the price move has enough momentum to continue moving in that direction as shown above

Trend-Line Break

From the above chart we can see that once the trendline on the AD indicator 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 MT4 Indicator.

Comparing the trend lines in MetaTrader 4 Indicator and the market price those of the AD indicator were broken before those of the chart. This is because volume always precedes price.

Forex Accumulation Distribution MetaTrader 4 Indicator - Accumulation/Distribution MT4 Indicator Signals

Signals

Exit

Exit signals are generated when the trend line on the Ac Dc is broken. A trend line break on the MT4 Indicator warns of a possible reversal.

Generated by Trend Line Break - Ac Dc MT4 Indicator

Entry

Once the trend line on the AD is broken it warns of a potential reversal in direction of the market.

However if we want to take a trade transaction in the opposite market direction it is always best to wait for a confirmation signal.

A confirmation signal is considered complete once both the MT4 Indicator and the price breaks both their trend lines.

Accumulation/ Distribution MT4 Indicator Signals - Ac Dc MetaTrader 4 Indicator

Entry Signal Generated by Trend Reversal

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