Williams’ accumulation distribution indicator, or Williams’ A/D or WAD indicator, is a popular indicator for finding trend changes. The indicator was developed by Larry Williams. Williams’ A/D tracks the buying and selling pressure of a security and signals buying and selling opportunities.
Williams’ accumulation/distribution defines the market trends and movements in two simple terms; accumulation – days where more volume is associated with upward price movements, and distribution – days where more volume is associated with downward price movements. WAD is determined by adding today’s A/D value to yesterday’s A/D value.
Where TRL is the true range low; it is either yesterday’s close or today’s low price, whichever value is lower. TRH is the true range high; it is either yesterday’s close or today’s low price, whichever value is higher. TRL is used to calculate A/D value when today’s close is lower than yesterday’s, and TRH is used when today’s value is higher than yesterday’s.
Like most others, WAD values of each day can be added to create a continuous indicator. Signals can be generated when the price trend diverges from indicator. Buy signals are generated on bullish divergences when price reaches a new low but WAD does not confirm it and sell signals are generated on bearish divergences when price reaches a new high but WAD does not confirm it. Like most other indicators, Williams’ accumulation distribution offer better results when used together with other indicators.
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