Accumulation distribution curve is a significant tool that can be utilized to find significant price movers before the move. Everyone can look at stock price chart too see that stock price is going down or going up. Now if you add accumulation data i.e volume data into it to find out that the stocks is being accumulated.

What are fundamental  behind it ? Let's take a situation that a fund manager of a fund XYZ  want to add a new stock in fund portfolio for example Dabur India . Fund manager wants 2-3% of dabur india, that means it needs 5 million shares. On an average 1 million shares of Dabur india change hand on NSE. Hence fund manager will have to keep buying for 5 days every stock on that counter to get 5 million stocks. Now since he is just keep buying it will dry up supply and his purchase price will skyrocket.

What can fund manager do to get stocks at lowest possible price ? Strategy is hidden in accumulation. He buys 50000 stocks and then sells 5000 at lower price to bring seller to table. Once enough seller are there he executes a big order to catch all that supply.. here is how  it goes on tape,

Dabur India Ltd stocks opens at 120 in morning .

Sellers 10000 at 120, 20000 at 121, 10000 at 121.5, 50000 at 122

Fund manager sees that he can get 90000 shares below Rs 122. He sends one order and volume spikes up. He catches all fish swimming below net at 122. Now price on board is 122.

A new lot of seller emerges on tape 50000 at 123, 30000 at 123.5 .

But he won't execute another order above 122. Instead he will sell may be 5000 stocks at 121. That will bring down price on board at 121. More sellers collect to sell at 121 and 122. He executes another order to get everything below 123. Now  he has more then 100000 stocks in his pocket below 123.

This is called accumulation. Buy more and sell less.

I hope one can now understand what will happen when fund manager is trying to sell huge chuck of his position at highest possible price. You got it right, this time he will sell more and buy less ..called distribution.

How to find accumulation ? Look for volume chart. If price of a stock is sliding down slowly but volume is going up, that's first signal of accumulation. Remember the price is going down slooly. Not dropping like rock. If price is crashing and volume going up means panic selling. Some one really needs money today.