Stock market analyst Marc Chaikin created the Accumulation and Distribution Line (A/D Line) in the early 1980s. He developed it to solve a common problem in technical analysis—figuring out whether trading volume was supporting the current price trend. Rather than just looking at volume spikes in isolation, Chaikin wanted a more straightforward way to measure how volume interacted with price over time.

His insight was that volume often moves ahead of price, with professional traders typically entering positions before major price moves. So he designed the A/D Line to track the cumulative flow of money into and out of a security based on both price and volume behaviour. This made it easier to see whether a trend had real strength behind it.

The A/D Line caught on quickly due to its straightforward logic and practical use, especially for spotting divergences or confirming trends. It also paved the way for another of Chaikin's tools—the Chaikin Oscillator. Today, the A/D Line is a staple on most charting platforms and is still trusted by many traders to help spot early signs of market shifts.

Accumulation and Distribution Line Formula

The Accumulation and Distribution Line (A/D Line) formula helps traders measure the cumulative flow of money into or out of a security by combining price and volume. It shows whether a stock is being accumulated (bought) or distributed (sold) over time, giving insight into the strength of a trend.

How to Trade Using the A/D Line

The Accumulation and Distribution Line (A/D Line) is used to confirm trends, identify divergences, and detect early signs of buying or selling pressure.

Trend Confirmation

• When the price rises, the A/D Line also rises.
• When the price is falling and the A/D Line is also falling, the downtrend is confirmed by continued selling.

Bullish Divergence

• Suppose the price makes a lower low while the A/D Line makes a higher low. In that case, it may signal hidden buying pressure and a possible bullish reversal.

Bearish Divergence

• Suppose the price makes a higher high while the A/D Line makes a lower high. In that case, it may indicate weakening momentum and a potential bearish reversal.

Use with Other Indicators

• The A/D Line should be combined with other tools like moving averages, RSI, or trendlines.
• It can also act as a filter to avoid false breakouts and improve trade confirmation.

How To Install & Remove

First, ensure that you have the cTrader trading platform installed. Then, unzip the file and double-click it to install the platform automatically.

• How to install
• How to open
• How to remove
• How to edit settings

Any Questions?

If you have any questions or encounter any issues, please first search our product help forum for the answer. If you cannot find it, post a new question.

Need a Broker

If you're still looking for a trustworthy broker, visit our top cTrader broker site.