accumulation

Accumulation/distribution index

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.

First a close location value is formed,

CLV = { (close - low) - (high - close) over high - low }

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, ie.

accdist = accdist_{prev} + volume times CLV

The starting point for the acc/dist total, ie. 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

A Chaikin oscillator is formed by subtracting a 10-day 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.

Similar indicators

Other Price × Volume indicators:

See also

  • Dimensional analysis - explains why volume and price are multiplied (not divided) in such indicators

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