Cumulative Delta CD

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Definition of 'Cumulative Delta CD'

See CD for other definitions of the acronym CD. In the finance world a CD can stand for Certificate of Deposit or Cumulative Delta. Here we are defining Cumulative Delta.

Cumulative Delta is an indicator displayed on charts. The value plotted is the volume at offer minus volume at bid for each time period in the day and then cumulating those numbers. The Cumulative Delta indicator is similar, in theory, to the cumulative NYSE TICK.

In trending markets, we will see progressively higher or lower values for Cumulative Delta. In non-trending markets, we see the Cumulative Delta line oscillate around a zero level.

It is useful to calculate Cumulative Delta as a function of total volume traded; that ratio tends to move toward zero through the day on range days and stays solidly positive or negative on trending days.

When we see the Cumulative Delta line diverge meaningfully from the cumulative TICK line, it tells us that there is relative bullish or bearish sentiment in the instrument relative to the broad list of stocks.

When Cumulative Delta and cumulative TICK are moving in the same direction, there is strong sentiment affecting stocks; that is worth following.

There's a discussion topic about this term here: Cumulative Delta Discussion

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