Williams Accumulation/Distribution: Divergence Concept and Sign-Based Rules

Summary

The document introduces Williams Accumulation/Distribution (WAD) as a way to interpret buying and selling pressure. Its written explanation recommends looking for divergence: a security making a new high while the indicator fails to make a new high is described as distribution and a potential sell; a new price low without a corresponding indicator low is described as accumulation and a potential buy.

The included backtest script, however, does not detect those price-versus-indicator divergences. It accumulates close movement relative to the prior bar’s low or high, then takes a long or short position according to whether the resulting WAD value is above or below zero; an input can reverse those directions. The script plots WAD and colors bars by the resulting position signal. No performance statistics, market, timeframe, or risk controls are supplied. Readers should therefore distinguish the indicator’s stated divergence interpretation from the simpler sign-based rules that the code actually trades; the source alone does not show that either approach has an edge.

Key ideas

• The written description treats price and WAD disagreement at new highs or lows as potential divergence signals.
• The script enters long or short according to whether its cumulative WAD value is positive or negative.
• A setting reverses the direction assigned to the WAD sign.
• The code does not implement the divergence rules described in the text.
• No backtest results or risk-management rules are provided.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.