Definition
The Accumulation Distribution (A/D) Indicator is a technical analysis tool that helps investors understand whether a stock is being bought (accumulated) or sold (distributed). It looks at both the price movement and trading volume to show the flow of money into or out of a stock.
Example
If a stock's price is rising and the trading volume is also increasing, the A/D indicator may move upward. This suggests that more investors are buying the stock. On the other hand, if the indicator starts falling, it may indicate that investors are selling the stock.
Caution
The Accumulation Distribution indicator should not be used alone to make investment decisions. It is usually used along with other technical indicators and market analysis to get a clearer understanding of a stock's trend.