Accumulation/Distribution Indicator - AD Indicator

Accumulation/Distribution Indicator 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.

Test the Accumulation/Distribution in Action

The Accumulation/Distribution is a technical analysis tool that will help you to trade more effectively.
Learn more about it in our educational guide. Confirm the theory on practice.

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How to Use Accumulation Distribution Indicator

The Accumulation/Distribution line is used for trend confirmation or possible turning points identification purposes.

Trend confirmation:

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

Forex Indicators FAQ

What is a Forex Indicator?

Forex technical analysis indicators are regularly used by traders to predict price movements in the Foreign Exchange market and thus increase the likelihood of making money in the Forex market. Forex indicators actually take into account the price and volume of a particular trading instrument for further market forecasting.

What are the Best Technical Indicators?

Technical analysis, which is often included in various trading strategies, cannot be considered separately from technical indicators. Some indicators are rarely used, while others are almost irreplaceable for many traders. We highlighted 5 the most popular technical analysis indicators: Moving average (MA), Exponential moving average (EMA), Stochastic oscillator, Bollinger bands, Moving average convergence divergence (MACD).

How to Use Technical Indicators?

Trading strategies usually require multiple technical analysis indicators to increase forecast accuracy. Lagging technical indicators show past trends, while leading indicators predict upcoming moves. When selecting trading indicators, also consider different types of charting tools, such as volume, momentum, volatility and trend indicators.

Do Indicators Work in Forex?

There are 2 types of indicators: lagging and leading. Lagging indicators base on past movements and market reversals, and are more effective when markets are trending strongly. Leading indicators try to predict the price moves and reversals in the future, they are used commonly in range trading, and since they produce many false signals, they are not suitable for trend trading.