Williams Accumulation Distribution
Tuesday, February 7, 2012
VOGAZ - Technical Analysis Software
Williams Accumulation Distribution
The Accumulation/Distributionindicator shows a relationship of price and volume. When the indicator isrising, the security is said to be accumulating. Conversely, when the indicatoris falling, the security is said to being distributing. Prices may reverse whenthe indicator converges with price.. It is a volume weighted price momentumindicator. It measures buying and selling pressure by calculating therelationship between the numbers of points that the market has moved from opento close, relative to the periods entire range. WilliamsAccumulation-Distribution tracks the buying pressure and selling pressure.Williams AD is a running sum of positive accumulation values (buying pressure)and negative distribution values (selling pressure).
The Williams Accumulation/DistributionIndicator tries to find underlying relationships between the close, high andlow prices. It tracks the buying pressure and selling pressure.
WilliamsAccumulation-Distribution (WAD) tracks buying pressure (accumulation) andselling pressure (distribution) on a security.
With accumulation, most of thevolume is associated with upward price movement.
With distribution, most of thevolume is associated with downward price movement.
Williams %R measuresoverbought/oversold. The most widely used method for interpreting Williams %Ris to buy when the indicator rises above 80 or sell when the indicator fallsbelow 20. Williams %R is a momentum indicator.It indicates that the essence ofhis trading system is based on interpreting readings of %R. William %R,sometimes referred to as %R, shows the relationship of the close relative tothe high-low range over a set period of time. The nearer the close is to thetop of the range, the nearer to zero (higher) the indicator will be. If theclose equals the high of the high-low range, then the indicator will show 0(the highest reading). If the close equals the low of the high-low range,
This method is used to decidemarket entry and exit point. The %R always ranges in between the value of 100and 0. For day-trading, when % R reaches 10% or lower it is considered a sellindicator and when it reaches 90% or higher it is considered as a buyindicator. Williams %R takes into account ten trading periods to determine thetrading range. Once the ten-period trading range is determined, the %R iscalculated where current periods closing price fall within that range. Thesignal is most useful in trending markets.
Williamss %R has proven veryuseful for anticipating market reversals. It identifies overbought or oversoldmarkets. It is important to remember that overbought does not necessarily implytime to sell and oversold does not necessarily imply time to buy. A securitycan be in a downtrend, become oversold and remain oversold as the pricecontinues to trend lower. Once a security becomes overbought or oversold,traders should wait for a signal that a price reversal has occurred. One methodmight be to wait for Williams %R to cross above or below -50 for confirmation.Price reversal confirmation can also be accomplished by using other indicatorsor aspects of technical analysis in conjunction with Williams %R.
One method of using Williams %Rmight be to identify the underlying trend and then look for tradingopportunities in the direction of the trend. In an uptrend, traders may look tooversold readings to establish long positions. In a downtrend, traders may lookto overbought readings to establish short
Welles Wilder Smoothing
The Welles Wilders Smoothingindicator is similar to an exponential moving average. The indicator does notuse the standard exponential moving average formula. This indicator is used ina the manner that any other moving average would be used. Moving averages areused to help identify the trend of prices. By creating an average of prices, that moves with the addition of newdata, the price action on the security being analyzed is smoothed.
Weighted Moving Average
A Weighted Moving Average placesmore weight on recent values and less weight on older values. A Moving Averageis most often used to average values for a smoother representation of theunderlying price or indicator. A weighted moving average is designed to putmore weight on recent data and less weight on past data. A weighted movingaverage is calculated by multiplying each of the previous periods data by aweight. The weighting is calculated from the sum of period. First, theexponentially smoothed average assigns a greater weight to the more recent data.Therefore, it is a weighted moving average. But while it assigns lesserimportance to past price data, it does include in its calculation all the datain the life of the instrument.
If larger weight factors are usedfor more recent periods and smaller factors for measurements further back intime, the trend will be more responsive to recent changes without sacrificingthe smoothing a moving average provides Weighted Moving Average smoothes a dataseries that is very important in a volatile market
Weighted Close is an average ofeach days open, high, low, and close, where more weight is placed on the close.The Weighted Close indicator is a simple method that offers a simplistic viewof market prices. It gets its name from the fact that extra weight is given tothe closing price. It places greater weighting on closing price. Bothindicators approximate the average price traded for a period and is used asfilters in moving average systems.
The weighted close study isanother way of viewing the price data. It places a greater emphasis on theclosing price rather than the high or low. This process creates a single linechart. It provides clear and concise picture of the market
The Volume Rate of Changeindicator shows clearly whether or not volume is trending in one direction oranother. Sharp Volume ROC increases may signal price breakouts. V-ROC is theindicator that shows whether or not a volume trend is developing in either anup or down direction. The Volume ROC shows the speed at which volume ischanging. This can be quite informative as almost every significant chartformation is accompanied by a sharp increase in volume.
The V-ROC shows the rate ofchange measured by volume. You will need to divide the volume change over thelast n-periods by the volume n-periods ago. The answer will be a percentagechange of the volume over the last n-periods.
With most markets, the volume canbe expected to within a constant range over time. When volume moves outsidethis range and begins to trend either upwards or downwards, then a capitulationof one sort or another can be expected. Using this breakout from the average,the VROC is best used as a confirmation indicator to other studies.
If the volume for the currentperiod is higher than n-period ago, the rate of change will be a plus number.If volume is lower, the ROC will be minus number. This allows looking at thespeed at which the volume is changing.
The Volume Oscillator shows aspread of two different moving averages of volume over a specified period oftime. The Volume Oscillator offers a clear view of whether or not volume isincreasing or decreasing. The Volume Oscillator displays the difference betweentwo moving averages of a volume. The difference between the moving averages canbe expressed in either points or percentage.
You can use the differencebetween two moving averages of volume to determine if the overall volume trendis increasing or decreasing. When the Volume Oscillator rises above zero, itsignifies that the shorter-term volume moving average has risen above thelonger-term volume moving average, and thus, that the short-term volume trendis higher than the longer-term volume trend.