Detailed explanation of MT4 indicators (1) Discrete indicator IAD

discrete index

Discrete technical indicators are determined by changes in price and volume. Volume acts as an important trade-off factor in price changes. The higher the coefficient (volume), the more the distribution of price changes can be reflected by this technical indicator (in the current period). In fact, this indicator is a variant of another more commonly used energy tide indicator, volume. Both indicators are used to confirm price changes by measuring their respective sales volumes.

When the discrete indicator increases, it means that a particular security has been accumulated (purchased), because at this time, the absolute share of sales volume is related to the rising price trend. When the indicator decreases, it means that a security is allocated (sold), and more sales are being made at the same time as the price movement decreases.

The discrepancy between a discrete indicator and the price of a security indicates an upcoming price change. In principle, in the case of such a discrepancy, the trend of the price moves in the direction in which the indicator moves. Therefore, if the price of the security decreases accordingly as the indicator grows, we can therefore expect a price pullback.

Calculation method:

The daily volume by which a share is added or deducted from the current accumulated value of the indicator. The closer the closing price is to the highest price of the day, the larger the share is added. The closer the closing price is to the lowest price of the day, the larger the share is deducted. If the closing price is exactly between the highest and lowest prices of the day, then the value of this indicator remains unchanged.

A/D(i)=((CLOSE(i)-LOW(i))-(HIGH(i)-CLOSE(i))*VOLUME(i)/(HIGH(i)-LOW(i))+A/D(i-1)

Where:

A/D (i) - the current bar value of the discrete indicator;

CLOSE (i) - the closing price bar value;

LOW (i) - the lowest price bar value;

HIGH (i) - the highest price bar value;

VOLUME (i) - Volume;

A/D (i-1) - The value of the discrete indicator on the previous bar.