Accumulation/Distribution Line
Definition
A volume-based indicator that measures the cumulative flow of money into or out of a security.
Explanation
The A/D Line combines price and volume to show whether a stock is being accumulated (bought) or distributed (sold). When the A/D Line rises while the stock price falls, it suggests accumulation — smart money buying. When it falls while price rises, distribution is occurring.
Formula
A/D = Previous A/D + CLV × Volume, where CLV = [(Close - Low) - (High - Close)] / (High - Low)
Example
A stock closes at $52, with a high of $54 and low of $50, on volume of 1M shares.
CLV = [(52-50) - (54-52)] / (54-50) = [2-2]/4 = 0. Money flow is neutral.
A CLV of 0 means the close was exactly at the midpoint — neither accumulation nor distribution that day.
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