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Using the Accumulation Distribution Indicator.
Developed by Marc Chaikin, the Accumulation Distribution Line is a volume-based indicator designed to measure the cumulative flow of money into and out of a security.
Chaikin originally referred to the indicator as the Cumulative Money Flow Line. As with cumulative indicators, the Accumulation Distribution Line is a running total of each period's Money Flow Volume.
First, a multiplier is calculated based on the relationship of the close to the high-low range.
Second, the Money Flow Multiplier is multiplied by the period's volume to come up with a Money Flow Volume.
A running total of the Money Flow Volume forms the Accumulation Distribution Line.
Chartists can use this indicator to affirm a security's underlying trend or anticipate reversals when the indicator diverges from the security price.
I found the best way to use this indicator is to use line studies that we will be using further into the course. This can simply be done by joining a lower high to another lower high or vice versa, joining higher lows to higher lows. And taking the breakout.
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