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Volume Accumulation Percentage

The Volume Accumulation Percentage (VAP) indicator is a technical analysis tool used primarily to measure the flow of volume in relation to price movements over a specific period. It helps traders and analysts assess the strength and conviction behind price trends by looking at how much of the trading volume is being “accumulated” (associated with upward price movement) versus “distributed” (associated with downward price movement).
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Manufacturer: nt8indicators
SKU: VAPI
Vendor: nt8Indicators
$9.90

How it works:

  1. Volume Accumulation (VA):

    • For each period (e.g., day, hour), the indicator determines whether the close price is higher or lower than the previous close.
    • If the close is higher, the volume for that period is considered “accumulated” (positive).
    • If the close is lower, the volume is “distributed” (negative).
    • If unchanged, volume can be ignored or counted as neutral.

  2. Volume Accumulation Percentage (VAP):

    • Over a defined period (e.g., 10 days if you use daily bars and a length of 10), sum the accumulated volume (positive) and distributed volume (negative).
    • Calculate the percentage of total volume that is accumulated

Interpretation

  • High VAP (close to 100%): Most of the volume occurred on up days — bullish signal, suggests accumulation.
  • Low VAP (close to -100%): Most of the volume occurred on down days — bearish signal, suggests distribution.
  • Around 0%: Volume is balanced between up and down days — possibly a sideways market.

Uses

  • Trend Confirmation: A rising price with a high VAP suggests a strong, healthy uptrend.
  • Divergence: If price rises but VAP drops, it can signal weakening momentum or potential reversal.
  • Volume Analysis: It filters out “noisy” volume and focuses on volume that supports the price trend.

Summary:
The Volume Accumulation Percentage indicator provides insight into how much trading activity is supporting price moves, helping traders judge the strength or weakness of trends and spot potential reversals.

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