The Accumulation/Distribution Line (A/D Line) helps traders understand if a stock is being accumulated (bought) or distributed (sold). It combines both price and volume to show the real market direction. If the A/D Line is going up, it means strong buying pressure. If it’s falling, it means selling pressure is increasing.

What is the Accumulation/Distribution Line?

The Accumulation/Distribution Line is a technical analysis tool that shows whether money is flowing into or out of a stock. It’s calculated using both the price and volume data. It helps traders see if a stock’s move is supported by real buying or selling strength behind the scenes.

How Does the A/D Line Work in Trading?

The A/D Line rises when there is more buying volume than selling volume. It falls when selling pressure is stronger. It helps traders confirm if a price movement is backed by strong volume. If the price is rising but A/D Line is falling, it may mean the rally is weak and could reverse soon.

Why is the A/D Line Important for Traders?

The A/D Line helps traders see what smart money is doing. If a stock price is flat or going down but the A/D Line is rising, it could mean big investors are buying quietly. This helps traders spot early signs of potential price movement and take better trading decisions.

How to Read Signals from the A/D Line?

If the A/D Line is going up while the stock price is flat or falling, it shows accumulation—buyers are active. If the A/D Line is falling while the price is rising, it shows distribution—sellers may be exiting. These signals help traders confirm if a trend is real or false.

Can the A/D Line Predict Reversals?

Yes, the A/D Line can sometimes show early signs of trend reversal. If price is going up but A/D Line is falling, it can be a warning of a possible downturn. If price is falling but A/D Line is rising, a bullish reversal may come. Traders use this to prepare entries or exits before the actual move.

How to Combine A/D Line with Other Indicators?

You can combine the A/D Line with indicators like RSI, MACD, and Moving Averages. While A/D shows volume strength, other indicators help confirm the entry or exit points. This combination gives more confidence and reduces false signals in your trading decisions.