The Accumulation/Distribution Line (ADL) is the bedrock of volume analysis. It attempts to answer a single, vital question: "Are the big players buying or selling?"
Unlike On-Balance Volume (OBV), which treats every up-day as 100% buying, ADL is nuanced. It looks at *where* the price closed within the day's range. A close near the high on massive volume screams "Accumulation." A close near the low on massive volume screams "Distribution."
## Historical Context
Developed by Marc Chaikin, the ADL was originally designed to spot divergences. Chaikin noticed that if a stock made a new high but the ADL failed to make a new high, a crash was imminent. He essentially quantified the "smart money" flow.
## Architecture & Physics
ADL is a cumulative indicator, meaning it has infinite memory. Today's value depends on the sum of all yesterdays.
The core mechanic is the **Money Flow Multiplier (MFM)**, also known as the Close Location Value (CLV). This value ranges from -1 to +1:
* **+1**: Close = High (Maximum Accumulation)
* **-1**: Close = Low (Maximum Distribution)
* **0**: Close is exactly in the middle
This multiplier is then applied to the volume to determine the "Money Flow Volume" for the period.
O(1) cumulative indicator — no window, no buffer. Throughput ~4 ns/bar. Division is the critical path (H-L guard prevents divide-by-zero on doji bars).
