Accumulation/Distribution

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

BREAKING DOWN '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. Close Location Value - CLV

    A measure used in technical analysis to determine where the price ...
  3. Divergence

    When the price of an asset and an indicator, index or other related ...
  4. Chaikin Oscillator

    An oscillator which measures the accumulation distribution line ...
  5. Advance/Decline Line - A/D

    A technical indicator that plots changes in the value of the ...
  6. Value Investing

    The strategy of selecting stocks that trade for less than their ...
Related Articles
  1. 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.
  2. 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.
  3. Technical Indicators

    Discovering Keltner Channels and the Chaikin Oscillator

    It's time to acquaint yourself with some lesser-known yet effective technical indicators.
  4. Options & Futures

    The Stock Cycle: What Goes Up Must Come Down

    Stock prices seem random, but there are repeating cycles. Learn to take advantage.
  5. 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.
  6. Trading Strategies

    Market Strength Tutorial

    Here you can learn about some of the indicators that traders and brokers use to determine the direction and strength of the market's present trend.
  7. Technical Indicators

    Trend-Spotting With The Accumulation/Distribution Line

    The A/D line highlights buying and selling pressure to confirm existing trends.
  8. Chart Advisor

    How Are You Trading The Breakdown In Growth Stocks? (VOOG, IWF)

    Based on the charts of these two ETFs, bearish traders will start turning their attention to growth stocks.
  9. Stock Analysis

    Are U.S. Stocks Still the Place To Be in 2016?

    Understand why U.S. stocks are absolutely the place to be in 2016, even though the year has gotten off to an awful start for the market.
  10. Term

    Understanding Market Price and Its Changes

    An asset’s or service’s market price is the current price at which it can be bought and sold.
RELATED FAQS
  1. Why is the Money Flow important for traders and analysts?

    Traders and analysts use money flow as an important indicator of volume, a way to represent the inflow and outflow of investor ... Read Full Answer >>
  2. What are the best indicators to use in conjunction with Bollinger Bands®?

    Bollinger Bands help technical analysts determine breakout prices for a stock and more accurately define a trading range. ... Read Full Answer >>
  3. Why is it important to track the Commodity Channel Index - CCI?

    Donald Lambert first introduced the commodity channel index (CCI) in 1980. The CCI has become an important indicator of cyclical ... Read Full Answer >>
  4. What are the differences between a bar chart and candle sticks?

    Bar and candlestick charts are used by technical analysts in the study of supply and demand for a security or commodity in ... Read Full Answer >>
  5. 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 ... Read Full Answer >>
  6. What is Fibonacci retracement, and where do the ratios that are used come from?

    Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Full Answer >>
Hot Definitions
  1. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  2. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  3. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  4. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  5. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
Trading Center