Accumulation/Distribution Line

What is the Accumulation/Distribution Line?

The Accumulation/Distribution Line is Marc Chaikin's cumulative volume-flow indicator. Each bar it computes a money flow multiplier from the close's position within the bar's range: (close minus low) minus (high minus close), divided by (high minus low). The multiplier is +1 when the bar closes at its high, -1 at its low, and 0 at midrange. It scales the bar's volume, and the scaled values accumulate into a running line: closes near the highs on strong volume push it up (accumulation), closes near the lows push it down (distribution).

The line's slope is compared against price. Agreement confirms the trend; disagreement, where price makes an extreme the line refuses to confirm, is the classic volume divergence warning. One known blind spot: the multiplier uses only the bar's own range and never looks at the prior close, so gaps are invisible to it. A stock can gap down hard, close near that day's high, and print positive money flow on a losing day.

How traders use it

• For trend confirmation: a rising line alongside rising price says volume is concentrated near the highs of each bar, while a flattening line under a rising price warns that participation is thinning.
• For divergences: price setting a new low while the line holds a higher low is read as selling pressure drying up, with the mirror image at highs; these are warnings to investigate, not standalone signals.
• As a base for derived studies: smoothed differences of the line turn it into an oscillator form, and the same close-location weighting appears inside several other volume tools.