Williams AD is a running sum of positive accumulation values (buying pressure) and negative distribution values (selling pressure), as determined by price's location within a given day's true range.
To calculate the Williams' Accumulation/Distribution indicator, determine:
True Range High (TRH) = Yesterday's close or today's high whichever is greater
True Range Low (TRL) = Yesterday's close or today's low whichever is less
The day's accumulation/distribution is then calculated 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 the same as yesterday's close then the A/D is zero.
The Williams' Accumulation/Distribution indicator is a cumulative total of the daily values:
Williams A/D = Today's A/D + Yesterday's Williams A/D
Williams states it's worth selling if the price makes a new high and the indicator fails to follow suit. As well, it's better to purchase if prices fall to a new bottom yet the A/D indicator fails to reach a new low.