What Is the Accumulation/Distribution (A/D) Line? Why A/D Can Fall When the Price Rises
“Today closed higher and OBV went up, so why did A/D go down? Is someone distributing?”
Not necessarily. The two indicators simply look at different things. OBV looks at whether today closed higher or lower than yesterday; A/D only looks at where the close lands within today’s high-low range. Close higher but near the bottom of the day’s range, and OBV adds while A/D subtracts. This article first works through three candles, then uses a real chart marked 1 to 3 (gold, January 2020) to show the two indicators moving in opposite directions on the same candle.
This article is part of MASQuant’s “Trading Academy · Technical Indicators” series. All the indicators are sorted by category in Technical Indicators: The Complete Guide.
In one sentence
A/D = each day’s volume split according to “where the close sits within the day”, then added up as a running total.
Close at the day’s high and the whole bar’s volume counts for the buyers; close at the low and it all counts for the sellers; close right in the middle and nothing is added or subtracted.
A/D is like a teacher who only looks at the final-exam ranking: it doesn’t matter how much you improved since last term, only whether you placed in the top or the bottom half of the class in this one exam. OBV asks “compared with yesterday?”, A/D asks “where does it stand within today’s range?” Most of the time the two point the same way; once in a while they point in completely opposite directions.
Work it out once: a higher close can still subtract
A/D first calculates a position score called CLV: (close − low) minus (high − close), divided by (high − low). A close at the high scores +1, a close at the low scores −1, and right in the middle scores 0. Each bar’s change in A/D = CLV × volume. The three candles below all have a high of 110 and a low of 100, and a volume of 1,000 (the following are round numbers made up for the example, not market data):
| Situation | Close | CLV | Change in A/D |
|---|---|---|---|
| Closes near the high | 109 | (9 − 1) ÷ 10 = +0.8 | +800 |
| Closes in the middle | 105 | (5 − 5) ÷ 10 = 0 | 0 |
| Closes near the low | 102 | (2 − 8) ÷ 10 = −0.6 | −600 |
Look at the third candle: if yesterday closed at 101, today’s close of 102 is a gain, and OBV adds the whole bar’s 1,000; but it closed in the lower part of the day’s 100-to-110 range, so A/D subtracts 600. A/D ignores yesterday’s close completely, so gaps don’t count either: open 5% lower, close at the day’s high, and A/D still scores the day as strong.
The formula
1 CLV = [(close − low) − (high − close)] ÷ (high − low)
(recorded as 0 when high = low)
2 Today's A/D = yesterday's A/D + CLV × volumeA/D was introduced by Marc Chaikin, and the same CLV is also used in Chaikin Money Flow, CMF (see What is Chaikin Money Flow (CMF)?). A/D is a running total, so the number itself means nothing; only the direction matters: start adding on a different day and you get a different value.
MT5 has a built-in Accumulation/Distribution indicator, which uses tick volume by default.
On CFDs, take special care: CFDs mostly have no central exchange, so what is usually available in MT5 is tick volume: the number of times the price quote changed during the period, not how much actually traded. It is often used as a proxy for how active the market is, but it is affected by volatility, the quote source and the trading session, and the same instrument can give different values on different platforms.
Read the chart: gold in January 2020, following 1 to 3
The chart below shows gold (XAUUSD) on the daily timeframe from November 2019 to mid-February 2020, taken from MT5’s historical prices. Over the whole stretch it rose from 1,468 to 1,581, a gain of 7.7%. The red dashed line marks 6 January 2020. The three panels below show, in order, tick volume, A/D and OBV; both lines start adding from the first day on the chart.
Closed up 0.88%, but near the bottom of the day’s range (6 January 2020). The previous day closed at 1,551.86. This day opened at 1,559.66, spiked to a high of 1,586.80, hit a low of 1,559.54, and finally closed at 1,565.48. Higher than the day before, but far below the day’s high, giving a CLV of −0.56. Tick volume that day was 2 times the median of the previous 20 days.
A/D goes down: minus 45,340. CLV −0.56 times the day’s volume, so A/D counts this as a day when the sellers had the upper hand.
Same day, OBV goes up: plus 80,362. OBV only sees that the close was above yesterday’s, so it adds the whole day’s volume of 80,362. Same candle: one says the buyers won, the other says the sellers won.
Over the longer run, the two lines actually point the same way: across the whole stretch gold rose 7.7%, A/D added 289,461 and OBV added 552,738. Single-day disagreements are common. They reflect the difference between “where today closed” and “how today compares with yesterday”, not necessarily someone quietly distributing.
This is a real stretch of historical prices, used to show how A/D behaves. It is not a general rule. Change the instrument, the timeframe or the period, and every number will change.
What you see, what it means
| What you see | What it usually means | But be careful |
|---|---|---|
| A/D rising along with the price | Most days close near the top of the day’s range | Only the direction matters; the size of the number means nothing |
| Price rising, A/D falling | Up days often close near the bottom of the day’s range | It may just be a few days of disagreement (1 2 on the chart) |
| A/D and OBV moving in opposite directions | Where the close sits and whether it closed up or down disagree | The two measure different things to begin with (2 3 on the chart) |
| A big gap down, yet A/D rises | The close was near the day’s high | A/D ignores gaps; the drop through the gap is not counted |
| A/D suddenly makes a big move | Volume that day was unusually high | On CFDs this means many quote changes, not necessarily a lot of money |
How to use it: three examples
Example 1: look for longer divergences
The price makes a new high, but A/D hasn’t made a new high for several weeks, which means up days are closing near the bottom of their range more and more often. That is more meaningful than a single-day disagreement, but it is still only a clue: divergences can last a long time.
Example 2: add a confirmation to breakouts
The rule can be written as: “Go long only when the price breaks above its 20-bar high and A/D is also near its own 20-bar high.” In other words, most of the breakout days closed near the top of their range.
Example 3: read it together with OBV
OBV asks “compared with yesterday”, A/D asks “where within today”. When both rise, the closes keep rising and keep landing near the top of the range; when they point in opposite directions, look at those candles: it is usually long upper wicks or gaps.
All three examples come back to one thing: A/D only looks at where the close sits within the day’s range. It doesn’t know where yesterday closed, or whether today gapped.
Common mistakes
1. Calling every A/D dip “big players distributing”
On the day marked 1, gold closed up 0.88% and A/D dropped 45,340, simply because the close was far from the day’s high. Over the longer run, both A/D and OBV rose across the whole stretch.
2. Comparing A/D values
A/D is a running total that starts on some particular day; change the starting point and the whole line shifts up or down. You can only read its direction and its divergences; “A/D has reached 300,000” tells you nothing.
3. Forgetting that A/D ignores gaps
Gap down at the open, close at the day’s high, and A/D scores it as strong and adds to the line; the drop it gapped through is not counted at all. On days with big gaps, A/D and price can easily point in opposite directions.
FAQ
What is the A/D indicator?
A/D (Accumulation/Distribution) was introduced by Marc Chaikin. It multiplies where the close sits within the day’s high-low range (CLV) by volume and keeps a running total, to show whether the buyers or the sellers are stronger.
How do A/D and OBV differ?
OBV looks at whether today’s close was higher or lower than yesterday’s and adds or subtracts the whole day’s volume; A/D looks at where the close lands within today’s high-low range and allocates part of the volume according to that position, without looking at yesterday.
How do you read A/D divergence?
The price makes a new high but A/D doesn’t follow, which means up days often close near the bottom of their range and buying pressure may be weakening. It is a clue, not a reversal signal; it is best combined with other conditions or confirmed with a backtest.
Does MT5 have A/D?
Yes. MT5 has a built-in Accumulation/Distribution indicator, and it uses tick volume by default.
Conclusion
The idea behind A/D is a subtle one: two up-closes mean different things if one lands near the high and the other near the low. But it is also narrow: it only looks at today’s single range and ignores yesterday and gaps.
So the real question is: on your instrument, have divergences between A/D and price actually been followed by reversals more often? One stretch of historical prices cannot answer that; you need to backtest the rule across many stretches of the market.
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If you already have an idea of your own, write the condition as one sentence, for example “go long only when the price breaks above its 20-bar high and A/D is also near its own 20-bar high”, give it to the AI Strategy Assistant, and press go to start the backtest. The backtest environment includes real market frictions such as spreads, slippage, changes in market liquidity and execution delays (see the AI Strategy Assistant guide for how to use it). Then remove the A/D condition and run it again, and you will see whether it actually helped. A backtest tells you “how this rule performed in past market conditions”, not a guarantee about the future.
An idea only becomes a strategy once it’s been tested.
The price chart in this article is taken from historical prices on the MT5 platform (daily; quotes and daily candle cut-off times differ slightly between platforms, so values may not match exactly), and the indicators are calculated by a program using the standard formulas; the round numbers in the example are not market data. Historical prices are used only to show how the indicator behaves and do not represent future price movements.
Risk disclosure: CFDs are high-risk financial products and can lead to rapid loss of capital. Past performance does not guarantee future results. All strategies and backtests are for reference only and do not constitute investment advice. Please read our Risk Disclosure carefully before trading.
