Home > Technical analysis > Technical indicators > Accumulation/Distribution (A/D)

Accumulation/Distribution (A/D)

The A/D indicator is the accumulation of the distinction between all upward movements (accumulation) in the period, when the price has raised by the closing point and downward movements (distribution) in the period, when the price has gone down by the closing point. The Accumulation/ Distribution indicator helps to determine if the Forex market is controlled by buyers (accumulation) or by sellers (distribution). It was worked out by Larry Williams. This indicator gives seldom signals forming discrepancy with the price at the critical tendencies' breaks.

Distinction between the highest price (high) and the close price (close) is subtracted from a distinction between the close price (close) and the lowest price (low). The value which is got as a result is multiplied by volume and divided on a difference of the highest and lowest prices. The indicator is equal to the sum of expression for all intervals of supervision. The A/D indicator recommends purchasing when prices go down to a new low, and sell when the price reaches a new peak.

The A/D indicator is defined by fluctuations of the price and volume. The volume serves as a weight factor at the price change. The more factor (volume), the bigger is the contribution of the price change for the defined time period in value of the indicator.

This indicator gives rather infrequent signals forming divergence with the price at the critical breaks of tendencies.