Real Cumulative Delta Volume

Real Cumulative Delta Volume (CDV) - Enhanced Volume Flow Analysis

What This Indicator Does
This indicator calculates cumulative delta volume using an enhanced approximation methodology that analyzes buying and selling pressure within each candlestick. It provides traders with insights into volume flow dynamics by tracking the cumulative difference between estimated buy and sell volumes over time.

Technical Methodology & Calculation Details
Volume Distribution Algorithm: The indicator uses a price-weighted distribution method to estimate buy and sell volumes within each bar:

• Delta multiplier = (close - low) / (high - low)
  
• Buy volume = total volume × delta multiplier
  
• Sell volume = total volume × (1 - delta multiplier)
  
• Net delta = buy volume - sell volume
  

Cumulative Delta Tracking: Unlike basic volume indicators, this approach maintains a running cumulative total of net delta values:

• CDV Open = Previous CDV Close
  
• CDV Close = Previous CDV Close + Net Delta
  
• CDV High/Low = Previous CDV Close + estimated intrabar extremes
  

Enhanced Features Beyond Standard CDV:

1. Divergence Detection: Automatically identifies when price direction conflicts with volume flow direction
   
2. Body Size Analysis: Compares current vs previous CDV candle body sizes to detect momentum changes
   
3. Conditional Color Coding: Special visual alerts when specific price/volume relationships occur
   
4. Signal Generation: Buy/sell signals based on divergence resolution patterns
   

How This Differs from Basic Cumulative Delta
Standard Limitations Addressed:
Most cumulative delta indicators on TradingView use simple uptick/downtick classification. This indicator enhances the approach by:

1. Price-Weighted Distribution: Instead of assuming 50/50 volume splits, uses the bar's price action (close relative to high/low) to estimate volume distribution
   
2. OHLC Representation: Displays CDV as candlesticks rather than just a line, showing intrabar volume dynamics
   
3. Integrated Divergence Detection: Built-in algorithms identify price/volume conflicts automatically
   
4. Advanced Signal Logic: Multi-condition signal generation beyond simple crossovers
   

Visual Enhancement Features:

• Dual display modes (candlestick or line)
  
• Special color coding for divergence conditions
  
• Moving average overlays for trend confirmation
  
• Optional buy/sell signal markers
  

Signal Generation Logic
Buy Signals Generated When:

• Previous bar showed bearish divergence (price down, CDV up)
  
• Current CDV candle shows specific color condition
  
• Current CDV body is contained within previous divergence body
  
• Price closes above previous high
  

Sell Signals Generated When:

• Previous bar showed bullish divergence (price up, CDV down)
  
• Current CDV candle shows specific color condition
  
• Current CDV body is contained within previous divergence body
  
• Price closes below previous low
  

Trading Applications
Volume Flow Analysis:

• Identify periods of hidden accumulation or distribution
  
• Spot when large players are buying/selling against the price trend
  
• Confirm trend strength through volume alignment
  

Divergence Trading:

• Early warning system for potential reversals
  
• Identify when price movements lack volume support
  
• Time entries based on divergence resolution
  

Trend Confirmation:

• Use CDV direction to confirm price trend validity
  
• Moving averages on CDV provide additional trend context
  
• Volume momentum changes often precede price momentum shifts
  

Display Options & Settings
Visual Modes:

• Candlestick: Full OHLC representation of cumulative delta
  
• Line: Simplified cumulative line display
  

Moving Averages:

• Optional SMA overlays (default: 50, 200 periods)
  
• Optional EMA overlays (default: 50, 200 periods)
  
• Customizable periods and colors
  

Signal Controls:

• Toggle buy/sell signals on/off independently
  
• Customizable colors for all visual elements
  
• Adjustable transparency and styling options
  

Usage Guidelines & Limitations
Best Practices:

• Most effective on timeframes 15m and higher due to volume data quality
  
• Works best in liquid markets with consistent volume
  
• Should be used alongside price action analysis and support/resistance levels
  
• Signals are more reliable during trending market conditions
  

Technical Limitations:

• Uses approximation methods due to lack of tick-by-tick data in Pine Script
  
• Volume distribution estimates may be less accurate during gaps or low-volume periods
  
• Effectiveness depends on quality of volume data from your broker/exchange
  

Market Context Considerations:

• Less reliable during market holidays or extremely low volume sessions
  
• News events and earnings can cause volume anomalies that affect calculations
  
• Consider market microstructure when interpreting signals on very short timeframes
  

Important Disclaimers

Educational Purpose: This indicator is designed for educational and analysis purposes. It does not constitute financial or investment advice.
Risk Warning: All trading involves risk of loss. Past performance of any indicator signals does not guarantee future results.
Testing Required: Users should thoroughly backtest and forward test this indicator before using it in live trading. Paper trading is recommended to understand signal behavior.
No Guarantees: The developer makes no claims about profitability or accuracy. Market conditions change and historical effectiveness may not continue.
Proper Usage: This is a technical analysis tool, not a complete trading system. Always use appropriate risk management, position sizing, and combine with other forms of analysis.

Developer: Delta Merge Professional Trading Applications
Access Instructions: Send a private message through TradingView explaining your trading experience and how you plan to use this indicator. Access is provided to traders who demonstrate understanding of volume analysis concepts and proper risk management practices.