Accumulation/distribution index: Difference between revisions

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The '''accumulation/distribution line''' or '''Accumulationaccumulation/Distributiondistribution index''' isin athe cumulative[[stock totalmarket]], volumeis a [[technical analysis]] indicator createdintended byto [[Marcrelate Chaikin]]price and volume, which addssupposedly oracts subtractsas eacha day'sleading volumeindicator inof proportionprice tomovements. whereIt provides a measure of the closecommitment isof betweenbulls and bears to the day'smarket highand is used to detect divergences between volume and lowprice action - signs that a trend is weakening.

First a ''close ___location value'' is formed,

==Formula==

: <math> CLV = { (close - low) - (high - close) \over high - low } </math>

This ranges from -1 when the close is the low of the day, to +1 when it's the high. For instance if the close is 3/4 the way up the range then CLV is +0.5. The accumulation/distribution index adds up volume multiplied by the CLV factor, iei.e.

: <math> accdist = accdist_{prev} + volume \times CLV </math>

The starting point for the acc/dist total, iei.e. the zero point, is arbitrary, only the shape of the resulting indicator is used, not the actual level of the total.

The name accumulation/distribution comes from the idea that during accumulation buyers are in control and the price will be bid up through the day, or will make a recovery if sold down, in either case more often finishing near the day's high than the low. The opposite applies during distribution.

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The accumulation/distribution index is similar to [[on balance volume]], but acc/dist is based on the close within the day's range, instead of the close-to-close up or down that the latter uses.

== Chaikin oscillator ==

A Chaikin oscillator is formed by subtracting a 10-day [[moving average (finance)#Exponential moving average|exponential moving average]] from a 3-day exponential moving average of the accumulation/distribution index. Being an indicator of an indicator, it can give various sell or buy signals, depending on the context and other indicators.

== Similar indicators ==

Other Price × Volume indicators:

* [[Money Flow]]

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== See also ==

* [[Dimensional analysis]] - explains why volume and price are multiplied (not divided) in such indicators

* [[Glossary of stock market terms]]

* [[Modeling and analysis of financial markets]]

{{technical analysis}}

==References==

[[Category: Technical analysis]]

{{Reflist}}

[[pl{{DEFAULTSORT:Accumulation/Distribution]] distribution index}}

[[Category: Technical analysisindicators]]