This indicator shows Accumulation/Distribution level which can be used for confirming trends or reversals (via divergence). It is an alternative to Chaikin's Accumulation/Distribution Line (ADL) and On Balance Volume (OBV) indicators. It can also replicate PVT and OBV via options in the input menu.
Here is a comparison of four related indicators:
OBV is too simple and has serious flaws as explained in PVT's wiki.
Chaikin's ADL is a broken indicator as can be seen in the chart below:
A/D Level addresses the flaws in these two indicators. It simply sums up portions of the volume that contributes to price change. These portions are visualized in dark green and red on "Accumulation/Distribution Volume (ADV)" indicator. This can also be achieved by ADV indicator if you are nerd enough.
@cryptotrader10002, your welcome. Please read my conversation with PizzaRoll below :)
tiamo3733
⋅
Thank you for sharing.
Gr3gory
⋅
... is it possible to add to MA’s like Ma10 & MA50 ?
Neverstorm
⋅
Amazing work youve done on all these different indicators!
Have you ever thought of integrating your Accumulation/Distribution formula into a Daily/Weekly/Monthly/Yearly VWAP? I think that might be really interesting :)
I have experimented with that idea. When I backtested it with a strategy version of some of these indicators, it didn't give better accuracy. I will try it on other indicators again.
PizzaRoll
⋅
Currently testing out this indicator, as it looks fairly accurate given the output of your back-testing. Would you interpret the divergence of price on the drop from $6800 to $6400 vs. the higher high in your ADL indicator as bullish then?
cI8DH
⋅
@PizzaRoll, it might be better to look at the lows for divergence. I do interpret it bullish. But you should bear in mind that volume indicators are vulnerable to wash trading. This is less of an issue on momentum indicators such as my previous ones or CMF because they tend to reset but ADL does not reset and keeps everything in its memory. One solution I found was averaging multiple tickers e.g. (BITFINEX:BTCUSD+BITSTAMP:BTCUSD+COINBASE:BTCUSD)/3. Using these combined tickers, I don't see any divergence
PizzaRoll
⋅
@hkh222, Thanks! That’s interesting the divergence disappears upon combining the tickers, as I haven’t had many tickers differ significantly between bitfinex and the combined tickers. I guess it was a result of the huge hidden buy wall on bitfinex on the dump. I will try to use the combined tickers moving forward to avoid this issue in the future. Love the indicator by the way, very intuitive variation of the accumulation/distribution indicator.
cI8DH
⋅
@PizzaRoll, there was a huge short covering yesterday at Bfx that distorted the volume. I am glad you like the indicator. I changed the PVT replication with an improvement on PVT. PVT is an underrated indicator.