Educational Post
Accumulation/distribution
The Accumulation Distribution Line is a volume indicator which measures the cumulative flow of money into and out of stock.
A high positive multiplier with high volume indicates strong buying pressure, which pushes the indicator higher. On the other hand, a low negative number with high volume indicates intense selling pressure, pushing the indicator lower.
This indicator tries to detect positive or negative divergences in price and volume data which signals an advanced warning of future price movements.
A trader who is accumulating stock is simply purchasing stock. Also, a trader who is sharing stock with the market is selling.
Thus, accumulation/distribution indicators size up demand and supply, which drives price movement.
