Accumulation/Distribution Indicator - AD Indicator
Accumulation/Distribution is a volume-based technical analysis indicator designed to reflect cumulative inflows and outflows of money for an asset by comparing close prices with highs and lows and weighting the relation by trading volumes.
For more information how to set the indicator in the terminal please click here
How to Use Accumulation/Distribution
The Accumulation/Distribution line is used for trend confirmation or possible turning points identification purposes.
- An uptrend in prices is confirmed if A/D line is rising;
- A downtrend in prices is confirmed if A/D line is falling.
Divergence pattern analysis:
- Rising A/D line along with decreasing prices indicates the downtrend may be weakening to a bullish reversal;
- Falling A/D along with rising prices indicates the uptrend may be weakening to a bearish reversal.
Accumulation/Distribution (A/D) Indicator
Accumulation/Distribution Indicator Formula (Calculation)
The Accumulation/Distribution indicator is calculated as the value of the closing position [1;-1] multiplied by the current volume of trades.
A/D(t) = [((C – L) – (H – C)) / (H – L)] x Vol + A/D(t-1), where: A/D(t) – current Accumulation/Distribution value; A/D(t-1) – previous Accumulation/Distribution value; H – current high; L – current low; C – close price; Vol – volume.
How to use Accumulation/Distribution in trading platform
Use indicators after downloading one of the trading platforms, offered by IFC Markets.