MT5 indicators: Accumulation

Hello Deriv Community,

The accumulation/distribution (A/D) indicator is a technical analysis tool that uses both price and volume data to determine whether a stock is being accumulated (bought) or distributed (sold). It aims to identify discrepancies between the stock’s price and the volume of trades being made, and can provide insight into the strength of a trend. An increase in the A/D indicator suggests that a security is being accumulated (bought) because most of the trade volume is associated with an upward trend in prices. A decrease in the indicator indicates that the security is being distributed (sold) because most of the trades are occurring during a downward movement in prices. Divergences between the A/D indicator and the security’s price can suggest an impending change in the price. Typically, when such divergences occur, the price tends to move in the direction of the indicator. For example, if the A/D indicator is increasing while the security’s price is falling, a price reversal may be anticipated.

Calculation:

"The accumulation/distribution indicator is calculated by determining the difference between the current day’s closing price and the previous day’s closing price, and adding or subtracting this difference from the accumulated value of the indicator based on the volume of trades for the day. If the closing price is closer to the day’s high, a larger portion of the volume will be added to the indicator. If the closing price is closer to the day’s low, a larger portion of the volume will be subtracted from the indicator. If the closing price is exactly between the day’s high and low, the indicator value will remain unchanged.

Where to find the Accumulation indicator

  1. Log in to your MT5 account.
  2. Click Insert on the toolbar menu.
  3. Click Indicators.
  4. You will find the Accumulation indicator on the menu that opens.

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