What Is Accumulation Distribution Line (ADL)?
ADL is a cumulative volume indicator that estimates whether an asset is being accumulated or distributed based on close location within the bar range.
Quick Answer
ADL is a cumulative volume indicator that estimates whether an asset is being accumulated or distributed based on close location within the bar range.
What Does ADL Measure?
The Accumulation/Distribution Line (ADL) was developed by Marc Chaikin. For each bar, it calculates a money flow multiplier based on where the close falls within the high-low range, then multiplies by volume and adds to a running total. When closes are consistently near the top of the range on high volume, ADL rises (accumulation). When closes cluster near the lows, ADL falls (distribution). ADL often leads price, making divergences particularly useful for spotting potential reversals. VaultCharts includes ADL as a free subpane indicator on desktop charts.
MF Multiplier = ((Close - Low) - (High - Close)) / (High - Low); ADL = Previous ADL + (MF Multiplier × Volume)How to Read ADL
- 1Rising ADL suggests accumulation (buying pressure)
- 2Falling ADL suggests distribution (selling pressure)
- 3ADL making new highs while price lags confirms strength
- 4ADL divergence from price can signal potential reversals
How to Use ADL in Trading
Common Mistakes to Avoid
Use ADL in VaultCharts
VaultCharts includes Accumulation Distribution Line with customizable settings. Combine it with our automated pattern detection and trade signals for better analysis.