The accumulation/distribution line

The accumulation/distribution line

The A/D line is one of the cleanest volume-based tools for spotting hidden buying or selling pressure. It's a running cumulative total — a line that climbs when money is flowing in and falls when money is flowing out. It doesn't tell you about today in isolation; it tells you about the direction money has been moving for weeks.

How the line moves: for each candle, the indicator looks at where the close finished WITHIN the candle's range. Close near the high? Most of that volume counts as buying — add it to the line. Close near the low? Most of it counts as selling — subtract it. A doji that closes mid-range adds almost nothing. The line is the cumulative score of all those daily decisions.

Why this is useful: the A/D line can move differently than price. Imagine a stock that's been chopping sideways for three weeks. Price is flat. But the A/D line is steadily climbing. That's a divergence. It tells you that even though price isn't going anywhere, money has been quietly flowing in. Often, that's accumulation by larger players before a breakout — and it's invisible if you only watch price.

Where the A/D line falls short: on forex it relies on tick volume, so it's noisier. On illiquid pairs the signal is fuzzy. And in general, it's a confirmation tool, not a primary trigger. Use it the way you'd use a doctor's blood test — it adds evidence to a story you're already reading from price. It rarely tells the story by itself.

Recap: A/D line tracks cumulative buying and selling pressure. Divergence between A/D and price flags hidden flow. Treat it as confirmation, not a standalone trigger.