Accumulation/Distribution is a volume indicator.

As a volume indicator, Accumulation/Distribution indicator was created by Marc Chaikin with the main objective of helping traders to know whether the cryptocurrency market is being bought or sold using volume and price. Therefore,Accumulation means traders are buying while Distribution means traders are selling

Just like in other volume indicator,Accumulation/distribution works on the basis of divergence,that is A/D moving in opposite direction to the price in the market after which price reverse.

According to Marc Chaikin, the values of Accumulation/Distribution is calculated using the following formula;

 

A/D= Previous A/D + Current money flow volume

 

 

1.Accumulation/Distribution cryptocurrency bullish

Since Accumulation/Distribution works on the basis of divergence,that is A/D moving in opposite direction to the price in the market.This is therefore to be said that when the A/D is moving upwards when the price in the market is falling,then a reversal of the price in the market will take place thus the price will also start moving upwards in the same direction as the A/D. This will signal the cryptocurrency trader of an upward market direction. The cryptocurrency trader can purchase a given amount of cryptocurrency with their USDT balance. They can either place a market buy order which will instantly be executed or they can place a limit buy order which will be executed when the price in the market reaches their limit buy order. Upon execution of their order,their trading account will start increasing in value in terms of USDT. This is indicated as from the candlesticks chart below;

 

 

A/D bullish

 

The price analysis above represents the market for TRX in terms of USDT. From the analysis,two points are being indicated. Point A and point B.Point B represents the accumulation/distribution curve while point A represents an upward movement for A/D. At point A,the A/D was moving in an upward direction while the market was moving in a downward direction.The market then reverse and starts moving in the same direction upwards as the A/D. This signals the cryptocurrency traders to purchase a given amount of TRX with their USDT balance. The cryptocurrency trader has two options,either to place a market buy order or a limit buy order. The market buy order will instantly be executed while the limit buy order will be executed upon the market price triggering the limit buy order price.

 

2.Accumulation/Distribution cryptocurrency bearish

Since Accumulation/Distribution works on the basis of divergence,that is A/D moving in opposite direction to the price in the market.This is therefore to be said that when the A/D is moving downwards when the price in the market is rising,then a reversal of the price in the market will take place thus the price will also start moving downwards in the same direction as the A/D. This will signals the cryptocurrency trader of a downward market movement. The cryptocurrency trader will then sell a given amount of TRX which he will have previously purchased and is currently holding to prevent their account from losing value. The cryptocurrency trader can either place a market sell order which will instantly be executed or they can place a limit sell order which will be executed when the market price triggers their limit sell order.This is indicated as from below;

 

A/D bearish

 

The price analysis above represents the market for TRX in terms of USDT. From the analysis,two points are being indicated. Point A and point B.Point B represents the accumulation/distribution curve while point A represents an upward movement for A/D. At point A,the A/D was moving  in a downward market direction while the market was moving in an upward direction.The market then reverse and starts moving in the same direction downward as the A/D. This signals the cryptocurrency trader to sell a given amount of TRX which he had previously purchased and is currently holding. The cryptocurrency trader can either place a market sell order which will instantly be executed or they can place a limit sell order which will be executed when the price in the market triggers their sell limit order.When their order is being executed,their trading account will increase in value in USDT.

 

Cryptocurrency market is a highly volatile market. As a cryptocurrency trader,whenever you place a buy order,always make sure to apply risk management so that whenever your buy order goes against you, your account do not depreciate so much in value.

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