Steemit Crypto Academy Season 4 | Intermediate course by @allbert –week 5: Trading with Accumulation / Distribution (A/D) Indicator.

Hello again Crypto gears. It seems like only yesterday that we started Season 4 of Steemit Crypto Academy. Time marches on and we are getting closer and closer to our goal: To reach the long-awaited financial freedom through trading.

This week I have for you another trading strategy through an indicator called Accumulation / Distribution or (A/D) Indicator for friends, but don't be afraid... it is not as complex as last week.

I still expect all your effort and commitment.

Let's hit the charts


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Image edited by me in Powerpoint

What is A/D Indicatior?

I am sure that in many other courses with the other teachers of the Academy you have read that the market moves in cycles. That is true.

There is more than one way to interpret those cycles, today for example we will learn that the market basically can be divided into Accumulation and Distribution phases. The explanation is very simple to understand:

Accumulation means that people get an asset and hold it, made by the law of supply and demand the price go up.

Distribution means that people get rid of an asset (distribute it), causing the price to go down.

Precisely the (A/D) Indicator measures this factor and tells us where we are in the market cycle (Accumulation or Distribution) and gives us certain signals that will help us make good decisions.

Graphically it is as simple as it gets: it is a line located below the price of the asset and moves up and down on a scale located on a panel on the right side of the screen.


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Image taken from Tradingview Source

The scale located in the right panel is completely different from the price scale, and it is so because of the formula used to calculate the indicator... (But that's up to you to figure out).

How it works A/D Indicatior

As I said before this Indicator measures which phase of the accumulation/distribution cycle we are in. But more importantly, it also tells us when one cycle is about to end and gives way to another, just as a stochastic indicator would do with a trend.

This quality of the indicator can help to predict a trend change and therefore can help us place a buy or sell order. However, before we go any further I will show you how to look for it in the tradingview indicator panel.

Just type the word "Accumulation" and then you must select the first option (in my case the only one) that appears.


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Image taken from Tradingview Source

If you are curious then you will notice that when you enter the Indicator there is no data or parameters that need to be modified. (Weird isn't it?)


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Image taken from Tradingview Source

Pros & Cons of A/D Indicatior

PROS

- In general, (not specifically) This indicator is based on the two most important aspects of the market in my view: price action and volume.

- Simple to use and to interpret.

- It tells us the flow of money, i.e. whether it is entering the asset or leaving it. Always go in the direction the money is going!

- It detects trends and trend changes.

CONS

- Doesn't always give accurate signals there are times where it doesn't give signals at all and just keeps to the general trend.

- It is not very sensitive, so it may not react to small price movements.

- It is not recommended for all types of trading.

- Do you remember Gaps of the class number 1? Well, this indicator does not detect them, since its formula is highly based on the closing prices of the candlesticks. Again this detracts from its reliability.

How to use A/D Indicator to detect trends

Keeping in mind its capabilities and flaws let's get into the practical part.

Because the A/D Indicator is directly proportional to the value of the asset, most of the time we will see that the line will go in the same direction of the price trend, or rather confirming it. For example.


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Image taken from Tradingview Source

If the price is in a clear uptrend and the A/D Indicator is moving in the same direction, this means that money is coming into the asset and people are mostly holding the asset. This is what makes the price go up

As I said, it confirms the trend because it tells us what is happening and where the money is flowing to.

If on the other hand, the price is in a clear downtrend, and the A/D Indicator is moving in the same direction, this means that money is leaving the asset and people are mostly getting rid of it, or in other words distributing it.


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Image taken from Tradingview Source

I know what you're thinking, maybe you're saying: many indicators do this... what makes it special?. Well, the main function of this indicator is through not trend confirmation but divergences.

How to use A/D divergences in trading

A divergence occurs when the indicator moves in one direction but the price moves in another.

These divergences are signs or indications of trend exhaustion or in other words exhaustion of buyers or sellers which foretells a trend change. This is the most interesting part of the indicator and can help us to take a buy or sell position.

Buy Entry

1- Find a divergence where the price is falling and the A/D Indicator is rising. This phenomenon is a clear indication that the bearish phase is about to end because money is flowing into the asset.

2- The downtrend in price will describe several lower highs. Draw a trend line that joins them all together.

3- Wait for the price to break the trend line. When this happens wait for the price to move away from the trend line (move up). At the close of the candle, you can place your long entry.


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Image taken from Tradingview Source

Buy Exit

4- To place the Stop Loss you can base it on the lowest point or peak of the price during the downtrend and place it slightly below.

5- For the take profit, you can base it on the 1:1, 1:2, or 1:3 Risk/Reward Ratio.

On the other hand, if you consider yourself a slightly more cautious trader you can opt to use the BRB strategy, wait for the price to retest the trend line, and place your entry further ahead. For example.


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Image taken from Tradingview Source

Over the past week and the week before, I have read many funny comments about students saying that teachers only use Charts with old price movements and that we never post charts with real trades, in real-time... well, as you can see, it’s not true (LOL) :-D... We also do trading in our spare time.

In both cases the trade turned out very well for me, giving a good profit. Let's see the case of a sell trade.

Sell Entry

1- Find a divergence where the price is rising and the A/D Indicator is falling. This phenomenon is a clear indication that the bullish phase is about to end because money is flowing out of the asset.

2- The uptrend in price will describe several higher lows. It draws a trend line that joins them all together.

3- Wait for the price to break the trend line. When this happens wait for the price to move away from the trend line (go down). At the close of the candle, you can place your short entry.


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Image taken from Tradingview Source

Sell Exit

4- To place the Stop Loss you can base it on the highest (recent) price point or peak during the uptrend and place it slightly above. In my case, I decided to overlook the extremely high wick that occurred 5 periods back because I consider that it is not congruent to the normal behavior of the asset.

5- For taking profit again you can rely on the 1:1, 1:2, or 1:3 Risk/Reward Ratio.

Finally, let's see how we are doing so far:


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Image taken from Tradingview Source

Still in the race but no results yet.

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CONCLUSION

Today I just taught you a very simple strategy which I recommend you start practicing on a demo account until you master it and start trading with real money.

I would like to focus on this conclusion not on talking about the Indicator, which I think is very simple and its function is clear. Rather I wish to focus on the function of the teachers in the Academy.

We are just facilitators, who indicate the important knowledge to discovery in the middle of a Sea of information and where to look for it, the rest is up to you all my friends. As I always say, the knowledge that sticks best in our brain is the one we discover by ourselves.

On the other hand, I wish you to know that from our side there are only good intentions as long as the rules of the game are respected. My wish is that you have the financial freedom that trading can offer you... and it is through all these simple tools that you can reach it.

On the other hand, do not forget that this method is not infallible, so I recommend you to have good risk management and do not invest more than you are willing to lose.

Finally, remember again the use of the new title format that is being used since week 2, which for our case is:

** Trading with Accumulation / Distribution (A/D) Indicator - Crypto Academy / S4W5 - Homework Post for @allbert.**

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Homework Task (Season 4/Week-5)

Before starting your answers this week, make sure you have read this publication at least twice and make your own research in order to understand the concepts.

1- Explain in your own words what the A/D Indicator is and how and why it relates to volume. (Screenshots needed).

2- Through some platforms, show the process of how to place the A/D Indicator (Screenshots needed).

3- Explain through an example the formula of the A/D Indicator. (Originality will be taken into account).

4- How is it possible to detect and confirm a trend through the A/D indicator? (Screenshots needed)

5- Through a DEMO account, perform one trading operation (BUY or SELL) using the A/D Indicator only. (Screenshots needed).

6- What other indicator can be used in conjunction with the A/D Indicator. Justify, explain and test. (Screenshots needed).

Guidelines

  • Be Original!!! Refrain from copy any else posts and ideas. Be creative. The content is certainly the same, but the way of presenting it is unique.

  • Your article should be at least 400 words.

  • Refrain from spam/plagiarism. Plagiarism of any kind won't be tolerated.

  • This task requires screenshot(s) of your own experience, add a watermark on it with your username. Also, use images from copyright-free sources and showcase the source, if any.

  • This homework task will run from 00:00 October 04th to 23:59 October 09th, Time UTC. (7:59 pm hora Venezuela)

  • Avoid editing the post after the deadline. Otherwise, your post will not be accepted.

  • Users having a reputation of 60 or above, and having a minimum SP of 400 (excluding any delegated-in SP) are eligible to partake in this Task. (Must not be powering it down)

  • Please use the tags correctly, do not write them down but rather copy them directly from this publication. If you use the tags incorrectly or make a typographical error we will not be able to locate your assignment.

  • Please don’t leave your homework link on the comment section unless your post hasn’t been graded within 48 hours.

  • If you have any doubts about Homework Task, feel free to join the comment section

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Cc:-

@steemitblog

@steemcurator01

@steemcurator02

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 2 months ago (edited)

sir, what you said is fair about you guys as teachers but honestly, the marking system is now somehow. the reasons for failing student is not good . sometimes, you look at your work and what he asked for and also some good students work, it now appears as if you were just graded anyhow and an other thing is an assignment with relative to indicators, there are points that can not be altered honestly cause they are a key part of the indicator so how does a work become less original cause he said the only thing that he or she can say. Every grading should be done properly so that people don't feel their effort is in vain. A lot of my friends are not happy with the recent marking system .Also why was there a division in levels when the works of a beginner should be in advanced and the reverse too? The academy leaders should please look into these cause on the long run, the reason for creating the academy is not met cause newbies end up b being exposed to professional works rather than them starting gradually
Thanks for your time
@sapwood
@allbert

 2 months ago 

This is true and most importantly, the last part of this write-up should be looked into. The beginners assignment is becoming very difficult by the week for the new bies this should be looked into cos the reason for the Academy is being forfeited as weeks go by.

Then the grading system, I think the professors should be a little considerate while grading, student are failing too much or scoring too low and that is not fair, it takes serious effort to do an assignment.

Plz the authorities of the academy should look into this

@sapwood
@albert

Well my friends, I am sure that all your suggestions will be taken into consideration. However, remember that my class is Intermediate Course, not Beginner, so I'm afraid I won't be able to help much in that case.

Secondly, remember that everything in life is a natural evolution and breaking certain barriers, so I consider it normal to gradually increase the level of demand. This is the way it is everywhere, why would it be any different here.

This system really allows people who have made an effort to have better rewards, otherwise, it would be really unfair as you say.
 2 months ago 

It's accepted for people on the long run to earn more that's why the levels were created and the increase in requirements . The levels should be for the education

Thanks @allbert

 2 months ago 

True

 2 months ago 

I agree with the last part about beginner courses getting quite advanced. I never noticed as all I did were advanced courses but for a beginner/newbie they're quite on the difficult side not wholly because they are too tough but also because the grading system used for beginner courses are more or less advanced.

Lets not forget It's called beginner courses for a reason, therefore most of what is done should be rather introductory and grading should be done leniently. I believe this will increase the number of participants in the long run.

I implore the crypto professors and the steemit team to look into this for the sake of newcomers. Keep up the good work.
@sapwood

 2 months ago 

Thanks allot for seeing this error too

 2 months ago 

I think this is very important and this suggestion shouldn’t be taking lightly.. The task are increasingly becoming difficult and the grading system is increasingly becoming less lenient. Beginners courses should be about what a newbie is supposed to learn not complex things. I really hope this is looked into and rectified

Thanks for this lesson Prof. @allbert. I can't wait to submit it.

 2 months ago 

A pesar que el tema no es complejo patron no debemos bajar el nivel un saludo a la distancia y Bendiciones para usted y su familia lider

Excelente clase profesor @allbert, realmente aprecio el gesto de facilitarnos estrategias sorprendentes cada semana! espere mi entrada

Thumbs up for the nice presentation of this wonderful lecture. Always on point. Bless you prof

 2 months ago 

Wow. Professor @allbert. This lesson is beautiful. Let me get to doing my assignment.

 2 months ago 

very good and direct lecture too sir @allbert

Hey professor @allbert,

What other indicator can be used in conjunction with the A/D Indicator. Justify, explain and test. (Screenshots needed).

I just want to ask what should we do to test the indicator in junction, should we show how the indicator is filtering false signals of AD indicator or is it something else?

Thank you!!

what better way to put it to the test than in an operation.

Proffesor, I'm still confused by the following question:

Through some platforms, show the process of how to place the A/D Indicator

What do you mean"Through some platforms"?

Explain through an example the formula of the A/D Indicator.

Do we have to explain the formula with our own drawing?

1- Use any platform and Explain how to set the indicator.

2-If you want to use any image, chart, resources, you are free to do it. Consider that orginality and clarity will be check.

understood. Thanks professor

Hello professor @allbert,

My homework submission from 2 days ago is yet to be graded and curated. Please look into it below:
https://steemit.com/hive-108451/@pangoli/trading-with-accumulation-distribution-a-d-indicator-crypto-academy-s4w5-homework-post-for-allbert

Thanks in anticipation.

Done My friend.

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