A/D (Accumulation / Distribution Index) is an indicator of momentum in which the number of transactions and stock prices are combined. Combining the number of transactions and the movements on prices gives an idea of whether the price trend will continue or not. Significant price movements and the combination of transactions with these price movements are the basis of this indicator. A/D is the replacement of the On Balance Volume, OBV indicator, which is more popular. Both indicators try to determine whether there will be a change in prices by comparing the number of transactions combined with prices. This indicator shows that the more prices a transaction is made with, the number of transactions namely; the upward trend of A/D in the upward trend indicates that the stock is collected. The safest is the number of transactions combined with upward movement in prices. The downward trend of A/D, i.e. the trend, shows that the stock has been disposed of and distributed. The safest prices are the number of transactions combined with the downward movement.
Money Flow Index (MFI)
The Money Flow Index (MFI) is an indicator that measures the power of money entering into stock or exiting from stock. Similar to the RSI indicator, the MFI intends to assess the monetary volume as opposed to this indicator. The money flow to stock is calculated as follows: First, the average price of the last day is compared to the average price of the previous day. If the difference is positive, it is accepted that there is money in stock. If the difference is negative, there is money out of stock. The flow of money for a given day is the product of the average price, the amount of the transaction. The positive money flow is the sum of the positive money flows over the calculated period, and the negative money flow is the sum of the negative money flows in the same period. The ratio of the sum of the positive currencies flows to the sum of the negative money flows gives the rate of money. This gives the net money flow into the stock during the period followed.
Finally, the MFI is calculated by the following formula: 100 – (100/1+ Money Percentage)
Money Ratio: Positive money flow / Negative money flow
The money flow index is similar to the Relative Strength Index indicator. However, in RSI, only the price information is used, without any volume. The indicator is interrupted by lines 20 and 80, and it is considered as a reception and sales signal. Moreover, the trend of the MFI indicator’s trend is less than the trend in the price chart, suggesting that the price trend will soon be reversed. The mismatches of the indicator with the price graph indicate trend returns. Above level 80, the overbought zone is considered and indicates a possible peak. The return from this level should be interpreted as a trend change. The level below 20 is the oversold territory and the possible dip level for the price. The upward trend of 20 is a trend change warning for the upward trend.
Transaction Volume is an indicator of the intensity of changes in investors’ approach to the market. If the prices of stocks increase and there is an increase in transaction volume, this is considered as a positive development. An important indicator, transaction volume data, is also used in Market Indicators. It is possible to have an idea about the general market trend as a result of the calculations made using the transaction volume data of the rising and falling stock pairs daily.