Advance Decline Volume

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Patent #: US 7,831,984 B2
MarketVolume®'s technology of displaying and presenting intraday volume and volume based technical indicators is protected by copyright law and patent. Unauthorized distribution or reproduction of proprietary technologies will be prosecuted to the maximum extent possible under the law.

"Declines volume" is the running total (cumulative sum) of the number of shares traded for all those securities that belong to the declines group for a given time period. If a particular security is currently trading below its close the previous trading day, its volume is added to the total volume of the declines group.

For the definition of "advances volume", simply adapt the above explanation.

Advances and declines volume can be analyzed using daily charts (i.e., one bar represents the trading activity of an entire day) or with intraday charts (one bar reflects the activity of 1, 5, 15, 30, or 60 minutes). The chart below shows an example of advances volume (in green) and declines volume (in red).

Chart 1.  5-day intraday (one bar = 15 min)
Cumulative Advances and Declines Volume (Cumulative AD Volume)

Looking at the charts bottom pane, you may have noticed that both the advances and the declines volume tend to increase as the trading day progresses. What we have charted here is the "cumulative advances and declines volume" ("cumulative AD volume"), a commonly accepted volume indicator among the majority of technical analysts.

What do we mean by "cumulative AD volume"? For instance, using the case of cumulative advances volume, we chart the advances volume for each completed bar, for all the stocks that presently belong to the advances group. The volume for the advances group is calculated for each completed bar, then added to the sum total of the volume of all the previous bars. For each new bar, we are summing up all the previous volume data, going all the way back to the beginning of trading that day. On a real-time intraday chart, the green line will reveal the dynamic variations that take place in the advances volume throughout the day, as they unfold.

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