Accumulation Swing Index (ASI)
tl;dr
The Accumulation Swing Index (ASI) tells you whether a stock is being accumulated (bought) or distributed (sold). A rising ASI means more buying is happening, which could lead to higher prices. A falling ASI indicates more selling and a potential price drop.
Definition.
A trend-following indicator that combines price swings and volume to gauge the strength of a trend.
Real-World Example.
Imagine you’re trying to understand if a stock is trending up or down, and you want to know when the big money is coming in to make a move. The Accumulation Swing Index (ASI) helps you figure that out. Think of it like watching how much energy the crowd is putting into a sports game.
For example, let’s say a stock price is bouncing up and down a lot. The ASI helps you spot whether the overall trend is moving towards accumulation (more buying) or distribution (more selling). If the ASI is rising, it suggests that accumulation is happening — investors are buying more and more. If it’s falling, it might mean that distribution is happening, and more people are selling their shares.
How to Use the Accumulation Swing Index (ASI).
- Open the Stock Chart: Open a chart of the stock you’re interested in.
- Add the ASI Indicator: Look for the Accumulation Swing Index (ASI) in your charting software’s list of indicators. It’s usually under the “Momentum” category.
- Interpret the ASI Movement:
- If the ASI is rising, it means there’s accumulation happening, and buying pressure is increasing. This could be a signal that the stock price will continue to rise.
- If the ASI is falling, it suggests distribution — selling pressure is increasing, and the stock price could soon drop.
- Confirm with Other Indicators: You can also check the A/D Line or other volume indicators to confirm the movement. If both the ASI and A/D line show similar trends, it adds confidence to your trade.
