Accumulation/Distribution

AAA

DEFINITION of 'Accumulation/Distribution'

A momentum indicator that attempts to gauge supply and demand by determining whether investors are generally "accumulating" (buying) or "distributing" (selling) a certain stock by identifying divergences between stock price and volume flow. It is calculated using the following formula:

Acc/Dist = ((Close – Low) – (High – Close)) / (High – Low) * Period's volume

INVESTOPEDIA EXPLAINS 'Accumulation/Distribution'

For example, many up days occurring with high volume in a downtrend could signal that the demand for the underlying is starting to increase. In practice, this indicator is used to find situations in which the indicator is heading in the opposite direction as the price. Once this divergence has been identified, the trader will wait to confirm the reversal and make his or her transaction decisions using other technical indicators.

RELATED TERMS
  1. On-Balance Volume (OBV)

    A momentum indicator that uses volume flow to predict changes ...
  2. Advance/Decline Line - A/D

    A technical indicator that plots changes in the value of the ...
  3. Chaikin Oscillator

    An oscillator which measures the accumulation distribution line ...
  4. Divergence

    When the price of an asset and an indicator, index or other related ...
  5. Close Location Value - CLV

    A measure used in technical analysis to determine where the price ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value ...
Related Articles
  1. Trading Strategies

    Why is the Money Flow important for traders and analysts?

    See why the concept of money flow is useful in technical stock market analysis, and how traders and analysts can use money flow to time transactions.
  2. Trading Strategies

    What are the best indicators to use in conjunction with Bollinger Bands®?

    Learn about indicators commonly used in conjunction with Bollinger Bands and how each one can give traders signals about trend changes and other opportunities.
  3. Trading Strategies

    Why is it important to track the Commodity Channel Index - CCI?

    Learn more about the commodity channel index, a technical momentum oscillator that traders can use to track overbought and oversold positions.
  4. Charts & Patterns

    What are the differences between a bar chart and candle sticks?

    Explore the difference between bar and candlestick charts. Learn how technical analysts use charts in the analysis of supply and demand for securities.
  5. Technical Indicators

    What's the difference between on-balance volume (OBV) and accumulation/distribution?

    On-balance volume and the accumulation/distribution line are similar in that they are both momentum indicators that use volume to predict the movement of "smart money". Given the variation in ...
  6. Technical Indicators

    The Basics Of Money Flow

    Learn how this indicator uses both price and volume to record a more complete picture of price action.
  7. Trading Strategies

    Momentum And The Relative Strength Index

    These two indicators can give the trader a better understanding of when to get in and out of an issue.
  8. Technical Indicators

    Discovering Keltner Channels and the Chaikin Oscillator

    It's time to acquaint yourself with some lesser-known yet effective technical indicators.
  9. Entrepreneurship

    Five Investing Pitfalls To Avoid, According to Investor's Business Daily

    Common sense or common folly? Discover some approaches to circumventing typical stumbling blocks on the road to profitable investing.
  10. Options & Futures

    The Stock Cycle: What Goes Up Must Come Down

    Stock prices seem random, but there are repeating cycles. Learn to take advantage.

You May Also Like

Hot Definitions
  1. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  2. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  3. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  4. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  5. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  6. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
Trading Center