Accumulation / Distribution

The Accumulation/Distribution (A/D) indicator is similar to the more frequently used On-Balance Volume (OBV) indicator. They both predict price movements by looking at changes in trading volume.

The Accumulation/Distribution (A/D) indicator is interpreted as follows:
  • Traders are buying when the indicator rises – this is accumulation
  • Traders are selling when the indicator falls – this is distribution
  • A price reversal is likely if the indicator and the price are moving in opposite directions

Accumulation/Distribution

Calculation

The Accumulation/Distribution (A/D) indicator is calculated by comparing the closing price to the maximum and minimum price; the result is negative if the close is nearer to the minimum, and is positive if the close is nearer to the maximum. This result is then weighted by the volume, and is divided by the trading range to normalize the result. The results from a number of intervals are then added together.

RANGE = HIGH – LOW

ADINT = ( ( CLOSE – LOW ) – ( HIGH – CLOSE) ) * VOLUME / RANGE

A/D = SUM( ADINT, N )

RANGE is the trading range for the interval

ADINT is the accumulation/distribution result for a single interval

N is the number of intervals that the indicator is summed across


You can find more information about technical indicators in the MetaTrader 4 User Guide. Select Help > Help Topics > Analytics > Technical Indicators.