Advance/Decline Line - A/D

AAA

DEFINITION of 'Advance/Decline Line - A/D'

A technical indicator that plots changes in the value of the advance-decline index over a certain time period. Each point on the chart is calculated by taking the difference between the number of advancing/declining issues and adding the result to the previous period's value, as shown by the following formula:

A/D Line = (# of Advancing Stocks - # of Declining Stocks) + Previous Period's A/D Line Value

INVESTOPEDIA EXPLAINS 'Advance/Decline Line - A/D'

This indicator is used by many traders to confirm the strength of a current trend and its likelihood of reversing. If the markets are up but the A/D line is sloping downwards, it's usually a sign that the markets are losing their breadth and may be setting up to head in the other direction. If the slope of the A/D line is up and the market is trending upward then the market is said to be healthy.

RELATED TERMS
  1. Market Indicators

    A series of technical indicators used by traders to predict the ...
  2. Decline

    When a security's price falls in value over a given trading day ...
  3. Dow Jones Industrial Average - ...

    The Dow Jones Industrial Average is a price-weighted average ...
  4. Toraku Index

    A technical indicator that compares the number of advancing stocks ...
  5. Arms Index - TRIN

    A technical analysis indicator that compares advancing and declining ...
  6. Advance/Decline Index

    A technical analysis tool that represents the total difference ...
RELATED FAQS
  1. What indicators help define a bull market?

    The primary indicators that help define a bull market are moving averages, advances/declines, volume, identified support ... Read Full Answer >>
  2. What is the Negative Volume Index (NVI) formula and how is it calculated?

    There are two distinct versions of the Negative Volume Index, or NVI, along with one hybrid version that draws from both. ... Read Full Answer >>
  3. Why is the McClellan Oscillator important for traders and analysts?

    All momentum oscillators stem from some basic assumptions about the nature of markets. The first suggests that trading volume, ... Read Full Answer >>
  4. Why is the Breadth Indicator useful for tracking the overall economy?

    The answer to this question depends on which definition of "overall economy" is used and the specific breadth indicator used. ... Read Full Answer >>
  5. What are the main signals traders use from an Advance/Decline ratio?

    Traders and technical analysts use the terms "advances" and "declines" to describe the number of stocks that close higher ... Read Full Answer >>
  6. What are the most popular forms of technical analysis?

    The most popular forms of technical analysis are simple moving averages, support and resistance, trend lines and momentum-based ... Read Full Answer >>
Related Articles
  1. Technical Indicators

    Be Aware Of The Hindenburg

    This indicator can protect your profits from going into a tailspin.
  2. Technical Indicators

    Discovering the Absolute-Breadth Index and the Ulcer Index

    It's time to acquaint yourself with these lesser-known yet effective technical indicators.
  3. Active Trading Fundamentals

    Market Breadth: A Directory Of Internal Indicators

    Discover the indicators that measure the force of the bulls and bears, telling you what a simple price chart cannot.
  4. Charts & Patterns

    Why These May Be the Top 4 Growth Stocks of 2015

    These four stocks have high upside potential in 2015.
  5. Chart Advisor

    Interested in Growth Stocks? See These 4 ETFs

    Given the rise in popularity of growth ETFs, there are several interesting growth stock choices for investors.
  6. Chart Advisor

    Watch Out For Falling Copper Prices

    Commodity traders have been turning their attention toward copper prices over the past several weeks.
  7. Chart Advisor

    Watch for Bullish MACD Crossovers in These Stocks

    These stocks are trending higher but recently experienced a pullback. Watch for a bullish MACD crossover to indicate upward momentum is continuing.
  8. Trading Strategies

    Bucking The Trend With Pattern Failure Strategies

    The best trade could be in the opposite direction when a classic price pattern doesn't behave according to ideal rules.
  9. Chart Advisor

    Buying Opportunities on Upside Wedge Breakouts

    Find buying opportunities in these stocks, which have seen their prices break out of long-term declining wedge patterns.
  10. Charts & Patterns

    Are These the Top Dividend Stocks of 2015?

    These dividend-paying companies offer a lot more than just dividends.

You May Also Like

Hot Definitions
  1. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
  2. Wash Trading

    The process of buying shares of a company through one broker while selling shares through a different broker. Wash trading ...
  3. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  4. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  5. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  6. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
Trading Center