Volume Indicators

The Accumulation/Distribution Line was developed by Marc Chaikin to calculate the cumulative flow of money into and out of a security. The Accumulation/Distribution calculation is based on the location of the close, relative to the range for the period:

Accumulation/Distribution = ( ( (Close - Low) - (High - Close) ) / (High - Low) ) * Volume

The Accumulation/Distribution Line is a good means for measuring the volume force behind a move.

Money Flow

The Money Flow is a momentum indicator that is similar to the Relative Strength in both interpretation and calculation. However, Money Flow is volume-weighted, and is therefore a good measure of the strength. Money Flow calculations are based on the average price for a period:

Typical Price = ( (Day High + Day Low + Day Close) / 3)

Money Flow = (Typical Price) x (Volume)

As with the relative Strength, the Money Flow can be used to determine if there is too much or too little volume associated with a security.

Volume Accumulation Oscillator

The Volume Accumulation Oscillator (VAO) designed by Marc Chaikin is calculated using the following formula:

VAO = Volume * (Close - (High + Low)  / 2 )

The Volume Accumulation Oscillator is most valuable when in an overbought/sold position as prices reach a new high or low and the oscillator fails to exceed its previous high/low reading and then reverses direction.