The Accumulation/Distribution line keeps a running tally of buying versus selling pressure — a cumulative story of whether the market is quietly accumulating or distributing.
NoVo Options Trading ·
The Accumulation/Distribution (A/D) line is a cumulative volume-flow indicator. Each bar it adds a “money flow volume” value — based on where price closed within the bar's range, weighted by volume — to a running total. A rising A/D line signals ongoing accumulation (net buying); a falling line signals distribution (net selling). It's the cumulative cousin of Chaikin Money Flow.
What it shows
Because it's cumulative, the A/D line reads the bigger-picture flow beneath price. When the A/D line trends up alongside price, the uptrend is backed by real buying. When they diverge — price rising while the A/D line falls, or vice versa — it warns the move isn't supported by volume flow, hinting at a potential reversal. The divergence is the A/D line's most-used signal.
How to use it
Use the A/D line mainly for divergence and confirmation. A/D line making new highs with price confirms trend health; A/D line failing to confirm a new price high (a bearish divergence) is an early warning of distribution under a rising market. On an intraday basis it can flag whether a move has genuine flow behind it or is running on thin participation — a slower, cumulative read than delta divergence.
The A/D line is the market's running receipt of buying vs selling. When it disagrees with price, someone is quietly on the other side.
The limits
The A/D line uses closing position within each bar and ignores gaps between bars, which can distort it on gappy tape, and it's a lagging, cumulative measure that can diverge long before price turns. It's a context/confirmation tool, best for spotting divergence and confirming trend health, not a precise entry trigger. Read it alongside price structure and the regime.
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NoVo is a software tool for market analysis, not financial advice. This article is general education, not investment advice. Options trading involves substantial risk of loss, up to and including your entire capital. NoVo makes no guarantee of profit, win rate, or performance, and past results do not predict future outcomes. You are responsible for your own broker account, configuration, and trading decisions.
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