Traders View Non-AMP

Enhancing Your Crypto Trading Knowledge with A/D Line Indicator

Published by
Qadir AK and Mustafa Mulla

If you are a crypto trader who relies on price action to make trading decisions, then you must learn about a simple indicator that uses volume and price as parameters to provide quality trading signals. This indicator is quite different from other indicators that use price and volume. By now, you may have realised what is being talked about. Yes, it is about the Accumulation/Distribution Line Indicator. It is time to delve deeper into this indicator. Let’s start!

1. What’s Accumulation/Distribution Line

The Accumulation/Distribution Indicator helps us figure out whether an asset’s price is likely to go up or down in the future. It does this by looking at the relationship between the asset’s closing price and how much of it is being bought (accumulation) or sold (distribution). 

1.1. The History of Accumulation/Distribution Indicator

The Accumulation/Distribution Indicator, often called the A/D indicator, was developed by Marc Chaikin. He created it to help traders assess the supply and demand of a financial asset. 

2. How Does Accumulation/Distribution Indicator Works

The Accumulation/Distribution Indicator helps traders predict when the price of an asset might change direction. It does this by showing the relationship between the asset’s price and how many people are buying or selling it. 

3. Calculating Accumulation/Distribution Indicator: The Easy Method

The Formula for Accumulation/Distribution is:

A/D = Previous A/D + Money Flow Volume (Current)

Here is how it works:

  • Money Flow Multiplier

First, you calculate a number called the Money Flow Multiplier, which tells you how strong the buying or selling pressure is.

Money Flow Multiplier = (Closing Price – Low Price of the Period) – (High Price of the Period – Closing Price) / (High Price of the Period – Low Price of the Period)
  • Money Flow Volume

Next, you find the Money Flow Volume for the current period. It is the product of the Money Flow Multiplier and the volume of that period.

Money Flow Volume = Money Flow Multiplier * Period Volume
  • Accumulation/Distribution (A/D) Value

To get the A/D value, you add the Money Flow Volume for the current period to the previous A/D value. This shows you whether money is accumulating (going in) or distributing (going out) in the asset.

A/D = Previous A/D + Money Flow Volume (Current)

You repeat this process for each period, continuously adding or subtracting the new Money Flow Volume to calculate the A/D value. 

4. Easy Guide to Launch Accumulation/Distribution Indicator on a TradingView Chart

Here is a step-by-step guide to launching the Accumulation/Distribution Indicator on a TradingView chart:

  • Log in to your TradingView account
  • Choose the chart for the asset you want to analyse
  • Look for the ‘Indicators’ button, usually at the top of the chart, and click on it
  • In the search bar, type ‘Accumulation/Distribution Indicator in the search results, click on it to add it to your chart
  • You can customise the indicator by adjusting its settings
  • Click ‘OK’
  • The A/D line will now appear on your chart
  • Analyse the Accumulation/Distribution Line

5. Ways to Analyse Accumulation/Distribution Line

The prime ways to analyse the A/D line are given below:

  • Upward Movement

When the A/D Line goes up, it means more money is coming into the asset. This can be a sign of potential price increases.

  • Downward Movement

When the A/D Line goes down, it suggests more money is leaving the asset. This could indicate potential price decreases. 

  • Divergence

Look for differences between the A/D Line and the price of the asset. If they move in opposite directions, it might signal a trend change.

  • Confirmation

Use the A/D Line to confirm the strength of a price trend. If the A/D Line aligns with the price movement, it can provide more confidence in the trend’s direction. 

Endnote

The Accumulation/Distribution Indicator developed by Marc Chaikin, is a valuable tool for traders to assess the supply and demand of financial assets. It helps predict potential price movements by analysing the interplay between buying and selling pressures. Using its formula, traders can calculate the A/D value. Launching it on a TradingView chart is made easy with a step-by-step guide. Interpreting the A/D Line offers insights into potential price changes, making it a useful resource in the world of trading. 

Qadir AK and Mustafa Mulla

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

Recent Posts

Binance Coin Rebounds After REX-Osprey Filed for BNB Staking ETF

Binance Coin (BNB) price rebounded on Tuesday on news of the REX-Osprey BNB staking ETF…

August 27, 2025

U.S. Department of Commerce to Start Issuing Statistics on Blockchain to Enhance Transparency

Howard Lutnick, the Secretary of the U.S. commerce, announced on Tuesday that his department plans…

August 27, 2025

Regulatory Green Light Fuels Solana Holders Excitement As Remittix Announces Major CEX Listing

Solana continues its rally as regulatory clarity expands worldwide. Hong Kong’s SFC has approved Solana…

August 26, 2025

Shiba Inu & Pepe Coin Fight For Top Meme Spot In 2025 Whilst PayFi Altcoin Raises Over $21 Million In Record Time

Meme coins are heating up as Shiba Inu and Pepe Coin compete for the top…

August 26, 2025

Exclusive: XRP Price Prediction Post-ETF Approval and Ripple Escrow Explained

XRP is quietly becoming a focus for institutional investors in 2025. Futures on the CME…

August 26, 2025

Cardano & Dogecoin: Further Downfalls Expected Ahead As Remittix Could Outshine Both In 2026 With 5,000% Growth

Both Cardano and Dogecoin remain under heavy selling pressure, flashing technical weakness that hints at…

August 26, 2025