# Accumulation/Distribution > The Accumulation/Distribution line weights volume by where the close falls in the range. Learn the formula, how it differs from OBV, divergence and Chaikin tools. Source: https://learn.tradelabsai.com/volume/accumulation-distribution/ Track: Volume Analysis · Level: Intermediate · Updated: 2026-10-03 Publisher: TradeLabs AI (https://tradelabsai.com). Education, not financial advice. Cite as: TradeLabs Learn, "Accumulation/Distribution", https://learn.tradelabsai.com/volume/accumulation-distribution/ The Accumulation/Distribution line (A/D line) is a cumulative volume indicator developed by Marc Chaikin. Like On-Balance Volume, it keeps a running total of volume to estimate whether money is flowing into or out of an asset. Unlike OBV, it does not assign a whole day's volume to buyers or sellers based only on whether price closed up or down. Instead, it weights volume by where the close falls within the day's range: closes near the high count as accumulation, closes near the low as distribution. ## The formula ``` Money flow multiplier = ((Close − Low) − (High − Close)) ÷ (High − Low) Money flow volume = Multiplier × Volume A/D line = Previous A/D + Money flow volume ``` The multiplier ranges from +1, when the close is at the high, to minus 1, when the close is at the low. A close exactly in the middle gives zero. **Example: One day's contribution** A stock trades between $48 and $52 and closes at $51.50 on 2 million shares. Multiplier = ((51.50 − 48) − (52 − 51.50)) ÷ (52 − 48) = (3.50 − 0.50) ÷ 4 = 0.75. Money flow volume = 0.75 × 2,000,000 = +1,500,000. The close near the high adds most of the day's volume to the A/D line. If the close had been $48.50, the multiplier would be minus 0.75 and the day would subtract 1.5 million. ## A/D line vs OBV | | A/D line | OBV | |---|---|---| | Volume assignment | Weighted by close within the day's range | All added or subtracted based on close vs previous close | | Gaps | Ignores gaps between days | Captures gaps through close to close comparison | | Strength | Shows buying or selling pressure within each period | Simple, captures overall direction | The two can disagree. A stock that gaps up and then closes near its low adds to OBV (because the close is above yesterday's) but subtracts from the A/D line (because the close is near the day's low). That difference itself can be informative. See [On-Balance Volume (OBV)](https://learn.tradelabsai.com/volume/obv/). ## Reading the A/D line - **Rising A/D line:** closes tend to be in the upper part of the range on volume, a sign of accumulation. - **Falling A/D line:** closes tend to be near the lows, a sign of distribution. - **Price rising, A/D falling:** bearish divergence, buyers are not pushing closes to the highs. - **Price falling, A/D rising:** bullish divergence, buyers are stepping in within each day despite lower prices. Divergence is the most common signal, but as with every volume indicator, it is a warning rather than an entry trigger. See [Volume Divergence](https://learn.tradelabsai.com/volume/volume-divergence/). ## Chaikin's related indicators Marc Chaikin built several tools on the A/D line: - **Chaikin Oscillator:** the difference between a 3 period and a 10 period exponential moving average of the A/D line. It shows momentum of accumulation or distribution; crossings of zero are watched as signals. - **Chaikin Money Flow (CMF):** the sum of money flow volume over a period, usually 20 or 21, divided by total volume over that period. Readings above zero suggest buying pressure; below zero, selling pressure. ## Using it in practice 1. **Confirm breakouts:** a breakout with the A/D line making new highs is stronger. 2. **Watch ranges:** a rising A/D line while price moves sideways can signal accumulation before an upside breakout, a pattern familiar from the Wyckoff method. See [Wyckoff Accumulation and Distribution](https://learn.tradelabsai.com/smart-money/wyckoff-accumulation/). 3. **Check trends:** a trend with a confirming A/D line is healthier than one with a diverging line. ## Limitations - **Ignores gaps,** which can hide large moves between sessions. - **Volume data quality** matters; less useful for spot forex. - **Can trend for long periods** regardless of price, making absolute levels meaningless. ## Common mistakes - **Treating divergence as an immediate reversal signal.** - **Comparing A/D values across assets.** - **Ignoring days with unusually low ranges,** where the multiplier can swing on small price changes. ## Frequently asked questions ### What does the Accumulation/Distribution line show? Whether volume is associated with closes near the highs (accumulation) or near the lows (distribution), as a running total. ### How is the A/D line different from OBV? OBV assigns all volume based on whether the close is above or below the previous close; the A/D line weights volume by where the close sits within the period's range. ### What is Chaikin Money Flow? An indicator that sums money flow volume over a period and divides by total volume, showing whether buying or selling pressure dominated. ## Sources - Wikipedia, [Accumulation/distribution index](https://en.wikipedia.org/wiki/Accumulation/distribution_index) ## Continue learning - Next lesson: [Volume Profile](https://learn.tradelabsai.com/volume/volume-profile/) - Previous lesson: [Money Flow Index (MFI)](https://learn.tradelabsai.com/volume/money-flow-index/) - Related: [Money Flow Index (MFI)](https://learn.tradelabsai.com/volume/money-flow-index/): The Money Flow Index combines price and volume into a 0 to 100 oscillator. Learn the MFI formula, overbought and oversold levels, divergence and how to use it. - Related: [On-Balance Volume (OBV)](https://learn.tradelabsai.com/volume/obv/): On-Balance Volume adds volume on up days and subtracts it on down days to track money flow. Learn the formula, divergence, breakouts and its limitations. - Related: [Volume Divergence](https://learn.tradelabsai.com/volume/volume-divergence/): Volume divergence is when price makes new highs or lows on shrinking volume. Learn how to spot bearish and bullish volume divergence and how to act on it. - Related: [Buying and Selling Pressure](https://learn.tradelabsai.com/volume/buying-and-selling-pressure/): Buying and selling pressure describe which side is more aggressive. Learn how to read it from candles, volume, delta and the tape, and the limits of each method. - Related: [Wyckoff Accumulation and Distribution](https://learn.tradelabsai.com/smart-money/wyckoff-accumulation/): Wyckoff schematics map the events inside accumulation and distribution ranges, from selling climax to spring. Learn each event, the phases and how to trade them.