The Advance-Decline Line tracks whether more stocks are rising or falling, helping commodity traders gauge market breadth and spot trend strength or weakness.
This technical indicator guide explains what the Advance-Decline index is, what it shows traders, and how you can calculate it on a chart.
We provide an example below to demonstrate how it works, along with explanations for each marker on the example chart.
What Is The Advanced Decline Line?
The Advance-Decline Line is used primarily to confirm price movement and detect divergences. The calculation of the Advance-Decline Line is quite simple:
New York Stock Exchange (NYSE) Advancing Issues – NYSE Declining Issues
The calculated number is then added to the previous day’s Advance-Decline Line.
Example: Say that today’s advancing issues ($ADV or $NYADV) is 1,692 stocks. That is 1,692 stocks closed the day with an increase in their share price.
The declining issues ($DECL or $NYDEC) is 1,311. At the NYSE, 1,311 closed the day with a decrease in their share price.
1,692 – 1,311 = 381
For the day, 381 more stocks closed the day higher than closed the day lower. This is a bullish sign.
To continue the example, yesterday’s Advance-Decline Line totaled 45,874. Today’s reading of +381 would be added to the total of yesterday. This would result in an updated total of 46,255.
Whether the total is positive or negative is irrelevant; what is relevant is the direction or the trend of the Advance-Decline Line.
What Does The Advance-Decline Line Show?
An increasing Advance-Decline Line is bullish because more stocks at the NYSE are closing the day with gains; whereas a decreasing Advance-Decline Line is bearish because more stocks are closing the day with losses.
The Advance-Decline Line is a powerful confirmation tool and divergence warning tool.
The above chart of the mini-Dow future contract of the Dow Jones Industrial Average or Dow 30 represents these confirmation and divergence signals:
High #1 to High #2
The mini-Dow future contract made a higher high at High #2; however, the Advance-Decline Line failed to make a newer high, in fact, it made a lower low.
At High #2, fewer stocks were participating in the rally; thus, there was less strength behind the rally in the Dow Jones Industrial Average. This failure of the Advance-Decline Line signaled a strong bearish divergence.
High #2 to High #3
This is an example of the Advance-Decline Line confirming the trend in the price of the mini-Dow future.
The mini-Dow future made lower highs and likewise, the Advance-Decline Ratio made lower highs.
Low #1 to Low #2
Yet another bearish divergence occurred from Low #1 to Low #2. The mini-Dow futures contract made a higher low, an acknowledged bullish sign.
However, the Advance-Decline Line did not confirm the mini-Dow future’s ascent. In fact, during the entire rally of the mini-Dow from Low #1 to Low #2, the Advance-Decline Line was making lower lows.
This bearish divergence signaled that stock investors and index futures traders should be wary of the recent increases; the market as a whole is not behind the recent move higher.
In conclusion, the Advance-Decline Line is a very effective tool to confirm price action in stocks and stock indexes as well as signaling potential reversals or weak price moves.
Another similar indicator is the Arms Index [TRIN].
Where To Start Trading
Further Reading on Volume Indicators
These volume tools complement Advance Decline Line: Accumulation Distribution, Herrick Payoff Index, and Open Interest.
Technical analysis is most widely used in CFD and forex trading. If you’re ready to apply these techniques, browse our vetted CFD brokers or forex brokers.
Update history
This page was revised 7 times between August 2020 and April 2026.
Added broker recommendation links and CFD/forex context to Further Reading section.
Removed broker comparison table and trading resources section, refocused Further Reading as volume-indicator-specific content.
Removed informational alert formatting and simplified "Where To Start Trading And Research" heading to "Where To Start Trading."
Removed blue info alert styling from example calculation and shortened section heading from "Where To Start Trading And Research" to "Where To Start Trading."
Restructured content into clearer sections with expanded explanations, added visual example box with calculation walkthrough, and reorganized further reading links into a formatted list.
Corrected two spelling errors ("irrelavent" to "irrelevant") and restructured section headings for better content organization.
Added explanation of Advance Decline Line calculation with worked example, new "High #1 to High #2" section demonstrating divergence signals, and "How to Get Started Trading" and "Further Reading" sections with broker reviews and related technical analysis topics.
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