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Accumulation/distribution of volume explained

Chaikin's indicator of accumulation/distribution, worked out by M. Chaikin and D. Lambert, is another version of the On Balance Volume (OBV). There are not many parameters defining the volume accumulation-distribution. Therefore, it is not that important to test the effectiveness of each indicator's value. This indicator's mechanism of work is based on two underwritten notions.

Firstly, at stable trend, volumes of tenders, as a rule, are higher than an average level. This concept suggests that at bull trend, VA will increase with positive values; at the descending bear trend, VA will decrease with negative values.

Secondly, as a rule, the closing prices are quite near their extreme values. That is why at bull trend, the closing is nearer to a ceiling price; at bear trend, the closing price is nearer to a floor price.

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