Accumulation/Distribution Williams

Accumulation is a term used to describe a market controlled by buyers; whereas distribution is defined by a market controlled by sellers.

Williams recommends trading this indicator based on divergences:

Distribution of the security is indicated when the security is making a new high and the A/D indicator is failing to make a new high. Sell.
Accumulation of the security is indicated when the security is making a new low and the A/D indicator is failing to make a new low. Buy.

Calculation:

To calculate Williams' Accumulation/Distribution indicator, first determine the True Range High ("TRH") and True Range Low ("TRL").

TRH = Yesterday's close or today's high, whichever is greater
TRL = Yesterday's close or today's low, whichever is less.

Today's accumulation/distribution is then determined by comparing today's closing price to yesterday's closing price.

If today's close is greater than yesterday's close:

Today's A/D = today's close - TRL

If today's close is less than yesterday's close:

Today's A/D = today's close - TRH

If today's close is equal to yesterday's close:

Today's A/D = 0

The Williams' Accumulation/Distribution indicator is a cummulative total of these daily values.

Williams' A/D = Today's A/D + Yesterday's Williams' A/D

Barchart then applies a 14-day moving average of the results for smoothing.

Default Parameters: Period: 14