Accumulation / Distribution Line
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Definition
The Accumulation/Distribution Line is a cumulative volume-flow line that weights each period's volume by the Close Location Value (where the close sits within the high-low range), refining OBV by measuring the degree, not just the sign, of buying/selling.
How to read it
For each bar, a Money Flow Multiplier ((close-low)-(high-close))/(high-low) ranging -1 to +1 scales the volume before it is added to the running total. Closes near the high add strongly positive flow; near the low add strongly negative flow. As with OBV, only the line's direction/trend matters, and it should confirm price. Rising A/D = accumulation; falling A/D = distribution; divergence from price warns of a hollow move.
How practitioners use it
Used as context among multiple indicators — never as a standalone signal to act.
Less common professional uses
The multiplier ignores gaps between bars - a stock that gaps down but closes near its (lower) high registers 'accumulation' even though it lost ground overnight, a known distortion on gappy instruments. The A/D line's magnitude is arbitrary and instrument-specific; only relative direction is usable, and long-running lines can drift so far that scale hides recent turns - watch the recent slope, not the level. It is the cumulative cousin of Chaikin Money Flow (which is the same multiplier summed over a fixed window and normalized); use CMF when you want a bounded oscillator and the A/D line when you want the running cumulative picture.
Sources & provenance
Marc Chaikin
This page is educational content published by Pachira Aquatica Global LLC. It is not investment advice and not a recommendation.