Accumulation/distribution index: Difference between revisions
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'''Accumulation/Distribution index''' is a cumulative total volume [[technical analysis]] indicator created by [[Marc Chaikin]], which adds or subtracts each day's volume in proportion to where the close is between the day's high and low. |
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The '''accumulation/distribution line''' or '''accumulation/distribution index''' in the [[stock market]], is a [[technical analysis]] indicator intended to relate price and volume, which supposedly acts as a leading indicator of price movements. It provides a measure of the commitment of bulls and bears to the market and is used to detect divergences between volume and price action - signs that a trend is weakening. |
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First a ''close location value'' is formed, |
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==Formula== |
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: <math> CLV = { (close - low) - (high - close) \over high - low } </math> |
: <math> CLV = { (close - low) - (high - close) \over high - low } </math> |
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This ranges from -1 when the close is the low of the day, to +1 when it's the high. For instance if the close is 3/4 the way up the range then CLV is +0.5. The accumulation/distribution index adds up volume multiplied by the CLV factor, |
This ranges from -1 when the close is the low of the day, to +1 when it's the high. For instance if the close is 3/4 the way up the range then CLV is +0.5. The accumulation/distribution index adds up volume multiplied by the CLV factor, i.e. |
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: <math> accdist = accdist_{prev} + volume \times CLV </math> |
: <math> accdist = accdist_{prev} + volume \times CLV </math> |
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The starting point for the acc/dist total, |
The starting point for the acc/dist total, i.e. the zero point, is arbitrary, only the shape of the resulting indicator is used, not the actual level of the total. |
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The name accumulation/distribution comes from the idea that during accumulation buyers are in control and the price will be bid up through the day, or will make a recovery if sold down, in either case more often finishing near the day's high than the low. The opposite applies during distribution. |
The name accumulation/distribution comes from the idea that during accumulation buyers are in control and the price will be bid up through the day, or will make a recovery if sold down, in either case more often finishing near the day's high than the low. The opposite applies during distribution. |
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The accumulation/distribution index is similar to [[on balance volume]], but acc/dist is based on the close within the day's range, instead of the close-to-close up or down that the latter uses. |
The accumulation/distribution index is similar to [[on balance volume]], but acc/dist is based on the close within the day's range, instead of the close-to-close up or down that the latter uses. |
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== |
==Chaikin oscillator== |
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| ⚫ | A Chaikin oscillator is formed by subtracting a 10-day [[moving average (finance)#Exponential moving average|exponential moving average]] from a 3-day exponential moving average of the accumulation/distribution index. Being an indicator of an indicator, it can give various sell or buy signals, depending on the context and other indicators. |
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== Similar indicators == |
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| ⚫ | A Chaikin oscillator is formed by subtracting a 10-day [[moving average (finance)#Exponential moving average|exponential moving average]] from a 3-day moving average of the accumulation/distribution index. Being an indicator of an indicator, it can give various sell or buy signals, depending on the context and other indicators. |
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Other Price × Volume indicators: |
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* [[Money Flow]] |
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* [[On-balance Volume]] |
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* [[Price and Volume Trend]] |
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== See also == |
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* [[Dimensional analysis]] - explains why volume and price are multiplied (not divided) in such indicators |
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* [[Glossary of stock market terms]] |
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* [[Modeling and analysis of financial markets]] |
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{{technical analysis}} |
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==References== |
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{{Reflist}} |
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{{DEFAULTSORT:Accumulation distribution index}} |
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Latest revision as of 12:00, 26 July 2024
The accumulation/distribution line or accumulation/distribution index in the stock market, is a technical analysis indicator intended to relate price and volume, which supposedly acts as a leading indicator of price movements. It provides a measure of the commitment of bulls and bears to the market and is used to detect divergences between volume and price action - signs that a trend is weakening.
Formula
[edit]
This ranges from -1 when the close is the low of the day, to +1 when it's the high. For instance if the close is 3/4 the way up the range then CLV is +0.5. The accumulation/distribution index adds up volume multiplied by the CLV factor, i.e.
The starting point for the acc/dist total, i.e. the zero point, is arbitrary, only the shape of the resulting indicator is used, not the actual level of the total.
The name accumulation/distribution comes from the idea that during accumulation buyers are in control and the price will be bid up through the day, or will make a recovery if sold down, in either case more often finishing near the day's high than the low. The opposite applies during distribution.
The accumulation/distribution index is similar to on balance volume, but acc/dist is based on the close within the day's range, instead of the close-to-close up or down that the latter uses.
Chaikin oscillator
[edit]A Chaikin oscillator is formed by subtracting a 10-day exponential moving average from a 3-day exponential moving average of the accumulation/distribution index. Being an indicator of an indicator, it can give various sell or buy signals, depending on the context and other indicators.
Similar indicators
[edit]Other Price × Volume indicators:
See also
[edit]- Dimensional analysis - explains why volume and price are multiplied (not divided) in such indicators
- Glossary of stock market terms
- Modeling and analysis of financial markets