The on-balance volume (OBV) and accumulation/distribution indicators found on MT4, and many other platforms are quite similar in the sense that they’re both momentum indicators that aim to predict the flow of ‘smart money’ using volume. This however, is where their similarities end.
So let’s break these down to see what’s what. On-balance volume is calculated by adding the volume on an up-day and subtracting the volume on a down-day. So, as you can probably imagine, when the price of an instrument is rising on decent volume, the OBV indicator will spike, offering a signal to traders that a significant move is occurring.
Accumulation/Distribution on the other hand is vastly different, despite them looking quite similar on a chart. Acc/Dist simply put, uses the current price level relative to its recent trading range, and then multiplies that by the period’s total volume. Consider the MetaTrader 4 chart below, despite being very different formulas, they can tend to display very similar patterns
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