Accumulation/Distribution

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Accumulation Distribution tracks the relationship between price and volume and acts as a leading indicator of price movements. It is the most important money flow indicator.

It provides a measure of the commitment of seller and buyers to the market and is used to detect divergences between volume and price action – signs that a trend is weakening.

It first compares opening and closing prices to the trading range for the period, the result is then used to weight the volume traded. The strongest signals on the Accumulation Distribution are bullish divergences (buy) and bearish divergences (sell).

Stop-losses should be placed below the most recent low (when going long) and above the latest high (when going short).