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William's Accumulation-Distribution

Williams' Accumulation-Distribution tracks the buying pressure and selling pressure.

Overview

Williams' Accumulation-Distribution (WAD) tracks buying pressure (accumulation) and selling pressure (distribution) on a security.

  • With accumulation, most of the volume is associated with upward price movement.
  • With distribution, most of the volume is associated with downward price movement.

The pressure is determined by where the close sits within today's true range.

Interpretation

Williams' AD is a running sum of positive accumulation values (buying pressure) and negative distribution values (selling pressure).

  • If today's close is higher than yesterday's close, WAD is increased by the distance of the close from today's true low (the lesser of today's low and yesterday's close).
  • If today's close is lower than yesterday's close, WAD is decreased by the distance of the close from today's true high (the greater of today's high and yesterday's close).

Signals

Divergence between Williams' AD and the price produces the signals. As with most indicators, WAD leads the price; or in other words, when a divergence occurs, the price usually changes accordingly. For example, if the indicator is moving up and the security's price is going down, prices will probably reverse (as shown in the example above).

  • A buying opportunity is signalled by falling prices and a rising WAD
  • A selling opportunity is signalled by rising prices and a falling WAD

Further information

Also see Volume Accumulation Oscillator, Price and Volume Trend and On-Balance Volume.