Categories: Trading

Accumulation/Distribution (A/D) Indicator

The Accumulation/Distribution (A/D) indicator is a technical analysis tool used to assess the buying and selling pressure of a stock or other security. The indicator is calculated by comparing the closing price of a security to its trading range for a given period, typically 14 days. A high A/D value indicates that the security is being accumulated (bought) while a low A/D value indicates that the security is being distributed (sold). The A/D line is a running total of the A/D values and can be used to identify trends in buying and selling pressure over time.

What is the formula for accumulation distribution?

The formula for the Accumulation/Distribution (A/D) indicator is as follows:

A/D = A/D(previous) + ((Close – Low) – (High – Close)) / (High – Low) * Volume

Where:

A/D(previous) is the previous period’s A/D value
Close is the closing price of the security
Low is the lowest price of the security during the period
High is the highest price of the security during the period
Volume is the trading volume of the security during the period

The formula calculates the A/D value for a given period by considering the relationship between the closing price, the high and low prices, and the trading volume. A positive A/D value indicates accumulation (buying pressure), while a negative A/D value indicates distribution (selling pressure). The A/D line is a running total of the A/D values over time.

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