For this demonstration, I will be making use of the tradingview platform to show how to add the A/D indicator on a chart.
To do this, we have to visit the tradingview website at https://www.tradingview.com. Click on the indicator icon which is at the top
On the indicator search, type in the name of the indicator to search for it in the library. I typed in AD on the search. Click on the the Accumulation Distribution to add the indicator on the chart
In the Accumulation/Distribution indicator area, click on the settings icon
There are three main sections on the A/D indicator settings; input section, styles section and visibility section.
Input - The A/D indicator doesn't have any inputs, however, the timeframe can be changed. By default, it is set to sane as chart.
Styles - The styles settings allows the colour and line thickness of the A/D oscillator line to be changed based on preference.
Visibility - The visibility allows the different elements to be toggled on or off depending on the technical analsys needs.
When it comes to A/D Indicator Calculation, two parameters are taken into consideration; the money flow multiplier and the money flow volume. The money flow multiplier basically focuses on the close price, high price and low price.
MFM = (CP – LP) – (HP – CP) / (HP – LP)
Closing price = CP
Highest price = HP
Lowest price = LP
= (MFM) x (PV)
Money Flow Multiplier = MFM
Period Volume = PV
Accumulation/Distribution = (P A/D) + (CPMFV)
Where;
Previous A/D = P A/D
Current Period Money Flow Volume = CPMFV
Let’s take for instance, AAVE/USDT
Close price = $307
Lowest price = $270
Highest price $324
Volume $7,889,000.
MFM = (307 - 270) - (324 - 307) / (324 – 270)
MFM = (37) - (17) / (54)
= 20 / 54
= 0.37
MFM = 0.37
MFV = (MFM) x Period Volume
MFV = 0.37 x $7,889,000
MFV = $2,918,930
Therefore,
The Accumulation/Distribution = $7,889,000 + $2,918,930
= 10,807,930
A/D = $10,807,930