Accumulation/Distribution Line (A/D Line)
The Accumulation/Distribution Line (A/D Line) is a technical indicator used in stock market analysis to measure the cumulative flow of money into and out of a security. It is calculated by taking the difference between the number of shares that have been bought and sold in a given period and multiplying it by the security’s price. The A/D Line is used to identify potential buying and selling opportunities, as well as to confirm the strength of a trend.
History of the A/D Line
The A/D Line was developed by Marc Chaikin, a Wall Street analyst, in the late 1960s. He believed that the flow of money into and out of a security was a better indicator of its future price movements than the actual price itself. The A/D Line is a cumulative measure of the buying and selling pressure in a security over a given period of time. It is calculated by taking the difference between the number of shares that have been bought and sold in a given period and multiplying it by the security’s price.
Comparison Table
| Indicator | Calculation | Interpretation |
|---|---|---|
| A/D Line | Difference between the number of shares bought and sold multiplied by the security’s price | Identifies potential buying and selling opportunities, as well as to confirm the strength of a trend |
Summary
The Accumulation/Distribution Line (A/D Line) is a technical indicator used in stock market analysis to measure the cumulative flow of money into and out of a security. It is calculated by taking the difference between the number of shares that have been bought and sold in a given period and multiplying it by the security’s price. The A/D Line is used to identify potential buying and selling opportunities, as well as to confirm the strength of a trend. For more information about the A/D Line, you can visit websites such as Investopedia, StockCharts, and TradingView.
See Also
- Relative Strength Index (RSI)
- Moving Average Convergence Divergence (MACD)
- On-Balance Volume (OBV)
- Price Volume Trend (PVT)
- Money Flow Index (MFI)
- Chaikin Money Flow (CMF)
- Force Index (FI)
- Ease of Movement (EOM)
- Negative Volume Index (NVI)
- Volume-Weighted Average Price (VWAP)
