Accumulation / Distribution Versus OBV | Which Indicator is Best?

Accumulation / Distribution is an evolved version of On-Balance Volume. But does this make it a better predictor of future price action? Well, the underlying calculation is based on a more realistic representation of the volume and price action relationship. But of course, simplicity is often better than complexity.
So in this video, a comparison of the indicators is performed on a real chart illustrating how an assessment might be performed. Martyn Tinsley then sets a challenge to viewers to do the same and post their results into the comments of the video. Let's see what the general consensus is...
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This is Episode 74 in the Darwinex 'Algo Trading for a Living' Playlist, and Episode 14 of the new 'Volume Data' mini-series.
Video Contents:
00:00 Introduction
01:16 Comparing Accumulation/Distribution with On-Balance Volume
02:45 OBV Calculation
03:11 Accumulation / Distribution Calculation
05:42 OBV and A/D on a price chart
06:20 Example of differences between A/D and OBV
07:33 Is Accumulation / Distribution better than On-Balance Volume?
08:16 A challenge for YOU...
09:08 Summary and Conclusions
Content Disclaimer: Past performance is not a reliable indicator of future results. The contents of this video (and all other videos by the presenter) are for educational purposes only and are not to be construed as financial and/or investment advice.
Risk disclosure: www.darwinex.com/legal/risk-d...

[@bidyut9873]

I must say your tutorial is superb. I checked with one stock where the A/D indicator is indeed a better indicator than OBV

[@alirezap88]

Very insightful as always, thank you again Martyn

[@PetStuBa]

this is THE best video explaining the AD indicator , well done sir

[@donbangert]

Running through the M5 EURUSD chart, it does seem A/D's lag is much less than that of OBV. Good episode!

[@TradeLikeAMachine]

Thanks for doing that Don. Let's see what others come up with....

[@SamuelJunghenn]

Thanks Martyn, always lots of good food for thought.

[@TradeLikeAMachine]

Thanks Samual

[@kashi7779]

Keep teaching sir . respect from India

[@gomesdiogo]

subscribed bcs of this video, high level information

[@Renegade121]

Great Stuff, much appreciated

[@leeles]

Thanks for your explanation, very clear and helpful! To compare OBV vs. Acc/Dis, looking at WEAT in 1-Yr. Timeframe is showing some interesting differences.

[@makarandchobe154]

Informative Sir thanks for sharing your views from India

[@omvishnuhari]

Nice one but OBV is better anyday. I tested it many many times. Comparing closing prices of two consecutive days makes more sense than seeing Shape of Candles .

[@funfactwithme]

Thanks for the explanation! Just to emphasize, OBV is comparing close prices to yesterday's, giving all volume to either buyers or sellers depending on which side is greater. Whereas ADL is comparing closing prices to low and high, giving portions of volume to buyers if close is closer to high (multipler > 0) and to sellers if close is closer to low (multipler < 0).

[@NabilTX]

Excellent!

[@AdvaitThakur]

Well explained 👍👍

[@pipjitsu]

Another amazing video, thank you! Question: Is there no way to access raw buy and sell volume data? Maybe directly from the exchange? That way there's the truest data instead of trying to approximate from overall volume data?

[@eddiec.9477]

great stuff! thank you

[@leonjbr]

Very good video.

[@TradeLikeAMachine]

Cheers Leon

[@nursenasdaq]

Thank you!

[@derickmwiruanampiu9737]

Thanks sir for information

[@leeles]

Additionally, check HAS (Hasbro) in YTD daily bars: on Oct 4th, 2022, the difference between OBV and Acc/Dis is very clearly visible.

[@izuddin1978]

thanks for sharing

[@Zzzbtc]

In your example about divergence showing on one indicator and not the other. The chart you used initially before the example had the same situation but on opposite indicators. It showed on obv but not a/d. Cool video though

[@eTaupe]

Observing Nasdaq intrday, A/D is smoother Divergences seem clearer to identify Interestingly, they can in some case move (locally) in opposite directions

[@TradeLikeAMachine]

Thanks for the feedback Tony. Yes, they will not do what we think 100% of the time. As I say it's a game of probabilities.

[@radekgarnys4790]

good video. what means if a/d or obv goes horizontally but price drops? is it weak downtrend which can easily changes for uptrend or horizontal trend?

[@ItsNocturnee]

Thanks a lot please if you can compare these with pvt indicator which is another volume indicator .

[@Thansk_]

thanks!! Not clear to me if I should look for divergences on A/D at the close of the candle?

[@trevordalen3175]

Do you plan on updating this video to include McNamara’s Tally? I hope so. I’m wondering what volume indicator is the best… Thanks! Trevor

[@BurdisPhoenix]

very interesting. i love obv and compared it to your a/d indicators. obv could spot top for bitcoin and eth in 2021 while a/d couldnt. i need to confirm if it’s spotting low better / faster than obv.

[@jamesocull547]

Worth noting that AD does not account for price gaps between bars. This can cause the AD to become out of sync with reality 🙂 Consider looking at Price Volume Trend as a similar indicator, but multiplied by the change in close price. This removes the gapping issue, but ignores the wicks. It’s different.

[@theawakening5354]

Thanx a lot for useful information...

[@omvishnuhari]

U r right. If we see daily candles , then OBV makes much more sense. Do Test it many times on many stocks. OBV > Accumulation Distribution Obv is better than accumulation/distribution. This is because the effect of smart money is for day long ! OBV takes into account of gaps between closing prices. Thats what matters. A/D most of time doesn't give any divergence. On the other hand OBV Rocks.. A/D is not evolved more than OBV. OBV is the unbeatable king of divergence providing indicators

[@khalidbinreaz8039]

i wait for MFL.because I used this with RSI.have any relation between RSI and OBV or MFL. I love math.. I am beginner this platform. thank you so much describing important indicators.I wait for more important indicators. Love u all.

[@TradeLikeAMachine]

The MFI calculation is very similar to RSI. The difference is that RSI is 100% based on price while MFI incorporates volume so should give a truer picture.

[@arvydasmerkevicius136]

Hi, A/D and OBV if we have hidden divergences or this valid?

[@delmartaylor7122]

I've tested both and decided neither fits my style, I settled on using the Price Volume Trend instead. Could you make a video about that one?

[@Rayal2300]

How is it not working tho if it’s Just another confirmation on top of price action ?

[@hopelessmmd]

U stated u would examine MFI. U seem to value Accum/Dist. over OBV. Plse contrast MFI with those. With all 3, it appears, the longer term/smoother movement is more important than the immediate behaviour of them. Agreed?

[@TradeLikeAMachine]

Coming in 3 episodes time :) Hold tight until then.....

[@kaboom4040]

Time wins

[@yashagrawal3074]

I think obv is far better

[@aryanshukla4963]

Well said the shape of candles simply don't work in price action. A/D depends on the shape of candles that is illogical

[@aryanshukla4963]

In practical world OBV works more than AD.