Accumulation/distribution index: Difference between revisions

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'''Accumulation/distribution index''' is a [[technical analysis]] indicator created by [[Marc Chaikin]]. It's a cumulative total volume, adding or subtracting each day's volume in proportion to where the close is between the day's high and low.

The '''accumulation/distribution line''' or '''accumulation/distribution index''' in the [[stock market]], is a [[technical analysis]] indicator intended to relate price and volume, which supposedly acts as a leading indicator of price movements. It provides a measure of the commitment of bulls and bears to the market and is used to detect divergences between volume and price 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 Viceopposite versaapplies forduring distribution.

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 whichthat the latter uses.

== Chaikin oscillator ==

A Chaikin oscillator is formed by subtracting a 10-day exponential [[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 ==

A Chaikin oscillator is formed by subtracting a 10-day exponential [[moving average (finance)|moving average]] from a 3-day 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.

Other Price × Volume indicators:

* [[Money Flow]]

* [[On-balance Volume]]

* [[Price and Volume Trend]]

== ReferencesSee 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}}

*[http://www.stockcharts.com/education/IndicatorAnalysis/indic_AccumDistLine.html StockCharts.com on the Accumulation/Distribution Line]

==References==

[[Category: Technical analysis]]

{{Reflist}}

{{DEFAULTSORT:Accumulation distribution index}}

[[Category: Technical analysisindicators]]