Definition
The A/D line uses the close's position within the day's range and volume to gauge accumulation (buying) or distribution (selling). Unlike OBV, it considers where the close falls within the high-low range, not just whether it's up or down.
Formula
A/D = Previous A/D + ((Close - Low) - (High - Close)) / (High - Low) × Volume
Example
If a stock closes near its high on heavy volume, it shows accumulation. Closing near the low on heavy volume shows distribution. The A/D line trends accordingly.
FAQ
What is Accumulation/Distribution Line?
A volume-based indicator showing money flowing into or out of a stock.
How do you calculate Accumulation/Distribution Line?
A common formula for Accumulation/Distribution Line is: A/D = Previous A/D + ((Close - Low) - (High - Close)) / (High - Low) × Volume
Why is Accumulation/Distribution Line important?
Accumulation/Distribution Line helps investors evaluate technical analysis and make more informed decisions.