Charles Drummond – PL Accumulation Distribution

P&L Accumulation & Distribution Seminar: Understanding When to Trade

The Art of Trading Charles Drummond 185 pp. (1993)

Here is an example segment from the “Accumulation/Distribution Seminar.” The Drummond This work uses an envelope:

“Before we go ahead, we have to make clear what “Distribution and Accumulation” What is it and why do we use it?

Distribution It refers to resistance’s performance.

Accumulation This refers to the performance of support.

If the market is rising, it will encounter geometric resistance. The resistance is where the market energy stops flowing. Once it reaches this point, selling should begin and buying should become more profitable. We can monitor the resistance by observing how distribution is done. By observing the price action in relation to the resistance, we can see if the price bar stops at resistance and more importantly, how much energy is left in order to stop resistance from happening. The concept is further enhanced by our observation of how this distribution is shaped by the geometric tools provided here: namely, the r-Su-zones, airbags, envelopes and pldot.

As you all know ,,,, if the pldot begins to hold on to top, then you have energy to the side. The pldot could be described as distributing. It is resistance and having an effect. Knowing when the pldot will distribute is what gives you an edge in trading. We believe that it is possible to predict when this will happen by understanding the theory of the envelope. The concept that a lower time frame will begin to show distribution for a higher time interval pldot is also added to this. This can be done by using the hierin-provided geometric tools.

Support, or accumulation, is the opposite. The support will result in more buying than selling. This will hold the low bar at support. But, more importantly, the close will rise from the bar lows to demonstrate good accumulation quality. Trading is possible when you consider the quality distribution and quality accumulation. It prepares for action, allows you to know when to trade and when resistance is coming down.

Before we move forward, we need to question why we are using an envelope idea.

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This is because if we know what prices will do with the envelope, we can then get a clear and simple view of how the market should behave.

The envelope concept will reveal the following: Prices move from the bottom of the envelope up to the top. The pldot will force prices out of the envelope if they do. Once prices are outside the envelope, they will stay there until an opposing energy force them inside. This energy is known by us as we can see what patterns do the work. It is predictable and reliable.

Before we get started, let me briefly explain one concept. It’s that price movements, which are like waves in an ocean, express true force when they leave an envelope. It’s called “a” ‘seawave’. There will be many passages of text that mention the word in the charts. ‘seawave’. Seawaves always begin at the beginning of new energy. Prices are the first to exit the envelope.

Now, we will be learning about the envelope and the role of the airbag.-Su-zones, pldot show what is about to happen to it.”

This book is not included in the reduced version.-Price package of support materials for traders who take the full course Drummond Geometry.