What is the distribution line?
, also known as an accumulation line, is the distribution line the type of indicator used by investors and financial analysts to determine future prices on the market. The focus of this technical analysis focuses on the volume of trading that takes place in this market, and what the movement of this volume indicates future events. In general, if the distribution line suggests that the volume of trading associated with a share or a group of shares is increasing, the price will also increase and signal to the investor who now buys before this increase in the price actually takes place.
The distribution line is a tool that is sometimes classified as a momentum indicator. This is because the evaluation of the volume of trading means to closely examine both the supply and the demand associated with a given share or a group of shares. The aim is to find out whether demand will increase, which in turn leads to more active trading. If this is the case, Thcena is likely to increase for stocks as more and more investors are trying to getAt any shares that are currently for sale.
Use of this situation requires not only an accurate assessment of the distribution line in terms of recording an increased or reduced volume in trading, but also to have an idea of how long this trend will continue. For example, if the distribution line suggests that trading is higher, the investor may decide to buy shares now before prices start to increase. At this point, it is the next step to find out how long they hold these shares to get the highest level of return. If the investor can determine that this trend is likely to continue two or three months before it turns, it is possible to have a general idea of when to offer these shares for sale, avoid the plateau and a possible decline in prices and leave with the facts.
Assessment of the distribution line to the project Future Movements of Prices is RELATIVE STRATEGY. Investors and others who participate in business situations will not only rely solely on this approach to their conclusions. Rather, understanding the current state of the distribution line will be used in conjunction with several other indicators as a means of creating a system of inspections and balance, which is used for the task of predicting these future movements. If this balance is maintained and all relevant factors are considered in relation to each other, the chances of accurate forecast and generating return on the basis of this prediction are significantly improved.