Accumulation/Distribution 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.
How to Use Accumulation/Distribution
The Accumulation/Distribution line is used for trend confirmation or possible turning points identification purposes.
- 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 Indicator Formula (Calculation)
A/D(t) = [((C – L) – (H – C)) / (H – L)] x Vol + A/D(t-1),
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 Install Accumulation / Distribution Indicator on MT4 Chart
Accumulation/Distribution indicator is standard Metatrader indicators, to put this indicator in your chart, please click Insert >> Indicator >> Volume >> Acculation / Distribution.