General – getting started
If you’ve been trading for any time, you will almost certainly have come across the concept of support and resistance. This powerful and simple concept lies at the heart of technical analysis. It forms the cornerstone of price action trading.
However, you can also think of support and resistance in another way. After all, these are also price areas where a market has paused, reversed, or moved into a congestion phase before moving on. As a result these price regions are associated with sustained buying and selling, or what Wyckoff called Accumulation and Distribution. These two concepts go hand in hand, and you can think of these in simple terms as follows:
- Accumulation relates to how an area of support performs
- Distribution relates to how an area of resistance performs
It is these two powerful concepts which come together in the Quantum Accumulation and Distribution indicator. It is the act of accumulation ( buying ) over a sustained period which creates the support region, whilst the act of distribution ( selling ) over a sustained period creates the resistance region. Having the power to see both, gives you unparalleled insights into price behaviour at these key levels, and the confidence to forecast future market behaviour as a result.
Most traders still draw their lines manually, leading to a crude interpretation of these key levels. Even those companies who have developed a trading indicator, have developed an equally imprecise tool. No doubt you’ve seen them. Generally these appear as wide bands on the chart, indicating vague areas of congestion, with associated support and resistance bands. These are virtually useless. They lack precision, or definition.
So, why has no one ever considered accumulation and distribution and the associated support and resistance as dynamic? After all, wouldn’t a dynamic indicator deliver high quality information where you need it most – at the live edge of the market?
Well perhaps no one has ever thought about it in this way before. After all, price action is dynamic.
Well, that’s what we thought too, and here it is at last – the Quantum Dynamic Accumulation and Distribution indicator. The first, and only dynamic indicator in the world which displays two things simultaneously. The regions of accumulation and distribution, and from that, the associated price levels of support and resistance. Even more so, it also displays the strength of these regions, the number of times they have been tested, and from which direction. This translates into a visual picture of the accumulation and distribution zones.
Finally, on your NinjaTrader platform, you will have an indicator that truly defines, with pinpoint accuracy, those areas of price support and resistance associated with accumulation and distribution which are so important to you as a trader.
It’s an immensely powerful indicator which maps out the direction of price at any given moment. For most traders, the profit that springs from trading, comes from determining these levels precisely. This indicator will give you the confidence to forecast where the market is likely to move next, giving you the ability to gauge:
- Optimum entry levels
- Safe exit levels
- Proper stop loss levels
- Excellent take profit levels
But as with all Quantum Trading indicators, there’s more, a great deal more!
The indicator shows you both graphically and numerically, how many times the price region has been tested. Levels which have been tested several times, will appear as deeper lines, whilst those levels tested only once or twice will appear as narrower lines. This instantly reveals the depth of any accumulation or distribution regions, and hence the likelihood of the level holding or being breached. Each level is painted blue or red to show you whether that level has seen accumulation or distribution in the past. If the level is painted red, then this has been an area of price distribution, and if painted blue then this is accumulation. An area of price accumulation is likely to act as support if approached from above, and if breached from below, to then provide bullish support to a further move higher. Conversely, an area of price distribution is likely to act as resistance if approached from below, and if breached from above, to then provide bearish resistance to a further move lower. The indicator is dynamic, which means the support and resistance lines generated coincide with the current price action
Every market behaves slightly differently. They each have their own price characteristics which are then reflected in the price action, which in turn is reflected in the dynamic accumulation and distribution levels. So, once again, we have included your own fine control. Using the custom option, you can increase or decrease the number of zones that appear on each chart, to suit your own trading style and approach. Some traders prefer more detail, others prefer less. The indicator caters for everyone. It’s a personal choice. It simply means you have full control to customise the indicator the way you want it. Matching the tool to the job means greater consistency and greater profitability.
The Quantum Dynamic Accumulation and Distribution indicator works in all timeframes from tick charts to time based charts, and from minutes to months.
Open your NinjaTrader 8 platform and select a chart.
Right lick the chart to bring up a menu which looks like the following image:
Select Indicators… which will open the following window. (Alternatively, you can open this window by clicking the Indicators button in the chart toolbar or by pressing Ctrl + I while focused on the chart.)
In the Indicators window, scroll down to the QuantumDynamicAccumulationAndDistribution indicator and click it to select the indicator. Once selected, click add in the Configured frame which will put it on the list of active indicators to be added in the chart.
Before clicking OK or Apply button to complete, the indicator has a number of options which can be configured. You can click the Apply button at any time, and this will apply any changes you have made to the indicator without closing the window. This will allow you to see the changes you have made to the indicator, without closing with the OK button or the Cancel button.
All of the user configuration is down on the right hand side of the Indicator window. These are the default setting when you first install the indicator to a chart.
Period – this parameter determines the number of bars the indicator should process starting from the most current one down to the nth bar equal to the value of this parameter. Increasing its value will increase the number of support and resistance lines as decreasing its value will also decrease the support and resistance lines.
Offset – this parameter is used to adjust the position of the line labels ( the one that determines the number of times a level is tested). By default these are located on the right hand side of the chart. A value of 0 places them on the right of the chart, whilst a value of 100 places them on the left of the chart.
ClusterFactor – this parameter is a constant in calculating the size of groups or clusters of zones generated by the indicator. It gives you full control over the number of accumulation and distribution zones that appear on the chart. Increasing this parameter causes the indicator to reduce the number of zones from the default of 0.
SupportLineColor – this parameter is used to change the color of the support zone which displays accumulation zones. The default is LightSkyBlue.
ResistanceLineColor – this parameter is used to change the color of the resistance zone which displays distribution zones. The default is LightCoral.
Input series – this shows the timeframe for the indicator and will be displayed according to the chart time.
Calculate – please DO NOT change this setting and leave as the default of On each tick
Label – this is the label which will display on the chart once the indicator is attached.
Maximum bars look back – this is the maximum number of bars in the look back for the indicator. We suggest you leave this as the default of 256 as it is memory friendly
Auto Scale – DO NOT change this setting and leave this as the default of True (checked)
Displacement – DO NOT change this setting and leave this at the default of 0
Display in Data Box – we suggest you leave this at the default of True (checked)
Panel – this specifies the panel number where the indicator will appear. We suggest you leave this as the default of Same as Input Series
Price Marker(s) – please DO NOT alter this setting and leave as the default of True (checked)
Scale Justification – please DO NOT alter this setting and leave as the default of Right
Visible – this shows or hides the objects of the indicator. Please leave it checked to make the indicator visible.
Removing an indicator
These are the steps to remove an indicator from a chart.
Right click on the chart then select Indicators… from the menu. Select QuantumDynamicAccumulationAndDistribution from the Configured frame and click OK to confirm and the indicator should be unloaded from your chart.