The Accumulation Distribution Line

The Accumulation Distribution line is a popular momentum indicator utilized by traders and investors to understand the cumulative inflow or outflow of money on a given asset.
In this episode of our TA Series, 'The Accumulation Distribution Line' TrendSpider's Jason Krutzky breaks down the basics of this popular indicator. He explains what it is, how it's calculated, and the various ways it is utilized by traders and investors of all kinds to make more informed and educated trading decisions.
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Chapters:
00:00 Intro
00:29 Accumulation Distribution line definition
00:59 How the A/D line is calculated
1:20 Money Flow Multiplier explained
1:31 How the candle close affects the A/D line
2:03 Volume's role in moving the A/D line
2:11 Why use the A/D line?
2:47 Spotting bearing divergence
3:37 Spotting bullish divergence
4:07 Spotting distribution
4:43 Using the A/D line in isolation
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[@JavierVazquez-bi9ol]

Very useful video Jason. Thanks for taking the time to explain the basics

[@TrendSpider]

Thank you for watching!

[@ws-1999]

Thanks, was looking at some other indicators for your example that didn't help with the divergence, but anchored VWAP 60 in this case was also helpful. I appreciate the video.

[@TrendSpider]

Glad it helped!

[@duyphan1452]

Could you make a video showing how to scan and trading setup using AD line?

[@mazimov]

Love it. Can you make a video also on OBV and difference with adl? Thanks 😊

[@TrendSpider]

Thanks or watching! I've added that suggestion to our list. Happy new year!

[@toddnedd2138]

Like it! Currently I´m dealing with VSA and wyckoff theories. This indicator should help. Are there any other indicators that fall in the same category?

[@TrendSpider]

Hey, Todd! Thanks for the question. Could you be a bit more specific? When you say 'same category', can you explain a bit more about what you're looking for?

[@toddnedd2138]

@@TrendSpider Thanks for asking. With same category I mean every indicator that is related to volume and price range (of the session) like this indicator but also differentiates more between different candle types. E.g a dragonfly doji + high volume tends to be bullish (like your indicator calculates). But an wide range positive close candle + high volume is even more bullish but could lead to the same indicator value. Maybe the "magic" happens by combining different indicators with candle pattern analysis (in the scanner) or sophisticated pattern recognition for accumulation and distribution. Something that came up to my mind, maybe an combination with the unusual option volume that your widget provides.

[@TrendSpider]

@@toddnedd2138 Well, with a DFD candle, even on high volume you're likely to get a flatter reading from the A/D line. For the A/D line to advance, price needs to close near the top of the range. The move in the indicator will be even more pronounced if that occurs on elevated volume. As for other indicators that take into account both price and volume...VWAP and aVWAP, On Balance Volume, Money Flow Index, Chaikin Money Flow... There are quite a few.