Friday, September 26, 2014

Accumulation/ Distribution Indicators for Tracking Dark Pool Activity

The quest to find where the largest institutional investors are investing vast sums of mutual fund and pension fund money leads many traders to search for accumulation/ distribution indicators.  

When choosing an accumulation/ distribution indicator it is important to determine what data is used in the formula.  Fortunately, this is relatively easy to do in your MetaStock charting program, which provides the formulas for many indicators. The problem with most of the accumulation/ distribution indicators, often called A/D indicators, not be confused with Advance/Decline indicators, is that the market structure has changed dramatically in just the past few years.  Before 2005, no retail side trader had ever heard of High Frequency Trading, aka HFT, or Dark Pools. These massive market structure changes are evolving rapidly and so too must the indicators you use.

The Williams Accumulation/Distribution indicator is an example of one of the indicators that traditionally fall under the Accumulation/ Distribution category. However, this indicator uses only price and time in its formula. It was written on the premise that price action revealed where large lots and giant lots were buying or selling. And in the 1990s that was the case.

But in today’s market, tracking price surges only reveals HFT action and does not reveal Dark Pools, which are significantly more important Market Participants with massive capital resources.  Chasing HFTs is never going to make you a happy prosperous trader.  Getting in with the Dark Pools will help you succeed.  Williams’ Accumulation/ Distribution indicator does not use the data needed to track the Dark Pools because they buy and sell without moving price. So this indicator alone will not give you the information you seek in terms of true accumulation/ distribution signals.

Tracking Dark Pool activity is where you must focus your attention, regardless of your trading style.  Knowing where the largest funds are buying or selling gives you ample time to enter and prepare for huge HFT moves later on.  Unfortunately, there are extremely few true accumulation/ distribution indicators, which must include volume in the formula to be a true accumulation/ distribution indicator in today’s market structure.

One true accumulation/ distribution indicator is the one we have created for the MetaStock Charting Program: TechniTrader Quiet Accumulation, aka TTQA.

With its ability to detect large-lot activity even when a stock’s price is not moving up or down, it is ideal for applying a Relational Analysis™, which reveals the active Market Participant groups in a stock through the patterns created due to how and when they buy or sell. The TechniTrader Quiet Accumulation indicator is one of the most powerful you can learn to use for identifying Dark Pool activity.

Relational Analysis using TTQA can expose contrarian patterns, Shift of Sentiment, Divergence or Convergence Patterns, just a few that help guide traders to when Dark Pools are moving in or out.  It is useful for all trading styles and provides information that is not available to retail traders otherwise.

Institutions that use Dark Pools do not move price, so using Accumulation/ Distribution indicators that do not include volume are of no true value for this type of study. With the market structure changes and so much of the giant lots using off-the-exchange transactions during the day, TTQA and Relational Analysis are now more important than ever to learn.

Check out TechniTrader Quiet Accumulation in this video.

Trade Wisely,

Martha Stokes CMT

Chartered Market Technician
Master Rated Technical Analyst: Decisions Unlimited, Inc.
Instructor & Developer of TechniTrader® Stock Market Courses
MetaStock® Partner

© 2014 Decisions Unlimited, Inc. DBA TechniTrader®. All rights reserved.

Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.


harry said...

If I ever find an investor, I will make him invest in my digital marketing agency plan. This is something I have been studying for. I have an assignment on digital marketing startup businesses models, and I will be taking an Assignment Help For Me from an expert. This will help me write a quality assignment and then share some of my future ideas with him so he may consult me.


brilliant, your guide is so comprehensive. I agreed with you. If you are facing any health issues regarding sexual problems visit our site and contact the Best sexologist in gurgaon


I am extremely impressed with your writing skill . anyway keep up the nice quality writing . it is rare to see a great blog nowadays.Thanks for sharing.If you facing any sexual issue cure for premature ejaculation


I have been looking for this information for a very long time loved this article feel free to visit our website . If you facing any sexual issue male Infertility

Mercado said...

I also want to say here about it .

"Accumulation/ Distribution Indicators for Tracking Dark Pool Activity"
The accumulation/distribution indicator (A/D) is a cumulative indicator that uses volume and price to assess whether a stock is being accumulated or distributed. The A/D measure seeks to identify divergences between the stock price and the volume flow.

More Tranz said...

DTF transfer sheets come in various sizes and can accommodate different printing needs, from small-scale designs to large-format prints. They are commonly used in the production of custom apparel, promotional items, and signage, offering versatility, high-resolution printing capabilities, and the ability to dtf transfer sheets full-color designs onto various materials.

kalyl said...

One potential approach is to look for indicators Geometry Dash that incorporate volume data, as Dark Pool transactions typically involve large volumes of shares being traded off-exchange.

Haley said...

Thanks grreat blog