- William's
Accumulation-Distribution main page -
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 (Chaikin),
Price and Volume Trend, and On-Balance Volume.
|
