This indicator is called as A/D, accumulation distribution, by some authors. As already discussed this is an approximate of total trade which has been happened in a day. The above formula is derived from the formula of A/D used by Metastock and tradestation as:
The reason why this indicator is used is to check the activity in the market. To check the popularity of stock or just to check if a particular news or incident has had any impact on the price of the stock.