Williams Accumulation Distribution

Williams Accumulation Distribution is traded on divergences. When price makes a new high and the indicator fails to exceed its previous high, distribution is taking place. When price makes a new low and the WAD fails to make a new low, accumulation is occurring.

Williams Accumulation Distribution was created by Larry Williams.

Trading Signals

  • Go long when there is a bullish divergence between Williams Accumulation Distribution and price.
  • Go short on a bearish divergence.

Example

Commonwealth Bank of Australia (CBA) is plotted with      Williams Accumulation Distribution.

Williams Accumulation Distribution Example

Mouse over chart captions to display trading signals.

  1. Go long [L] on a bullish divergence.

Setup

See Indicator Panel for directions on how to set up an indicator. Edit Indicator Settings to alter the default settings.

Formula

To calculate Williams Accumulation Distribution:

1. Calculate the True Range High and True Range Low:

    True Range High is the greater of:

  • High [today], and
  • Closing price [yesterday]

    True Range Low is the lesser of:

  • Low [today]
  • Closing price [yesterday]

2. Compare Closing price to yesterday's Closing price:

  • If Close [today] is greater than Close [yesterday]
               Price Move [today] = Close [today] - True Range Low
  • If Close [today] is less than Close [yesterday]
               Price Move [today] = Close [today] - True Range High
  • If Close [today] equals Close [yesterday]
               Price Move [today] = zero

3. Multiply the price move by volume:
                      AD [today] = Price Move [today] * Volume [today]

4. Calculate the cumulative total:
                      Williams AD = AD [today] + Williams AD [yesterday]

AUTHOR'S NOTE:

Steven Achelis omits step 3. above in his book Technical Analysis A-Z and several other websites/software programs appear to follow this approach. For the benefit of investors accustomed to Achelis' approach, we have provided both versions. Achelis' version is described as Williams Accumulate Distribute.

Colin Twiggs

Author: Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.

He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.