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There are two different Accumulation/Distribution indicators, one by Larry Williams, which is called Williams Accumulation/Distribution and the standard Accumulation/Distribution Index by Marc Chaikin.
The Williams Accumuilation/Distribution indicator does not take into account trading volume. If today's close is higher than yesterday's close it adds an amount equivalent to [today's close - today's true range low], if today's close is lower than yesterday's close, it subtracts an amount equivalent to [today's true range high - today's close].
Accumulation/Distribution Index by Marc Chaikin
This indicator calculates the money flow as [ volume * (2*close - high - low)/(high-low)]. If you add the money flow to yesterday's value for the accumulation/distribution index you obtain today's value.
Chaikin Money Flow Index
It is a normalized version of the Accumulation/Distribution Index. It is obtained by adding up the accumulation/distribution figures over a specified period and dividing it by the total volume. The Chaikin Money Flow Index is a NinjaTrader default indicator.
The Chaikin oscillator is obtained by deducting a 10 period EMA from a 3 period EMA of the accumulation/distribution index. The Chaikin Oscillator is a NinjaTrader default indicator.
The Chaikin Money Flow Index or the Chaikin Oscillator are probably better choices than the standard Accumulation/Distribution indicators.
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I am looking for a Williams accumulation distribution indicator that I can change the period. I have found a few variations with volume and with ZLEMA, but I am just looking for the basic indicator. Can anyone help?
The basic indicator does not have a setting for a period. It just accumulates the daily price moves multiplied with volume.
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:
closing price [yesterday]
2. Compare today's closing price to yesterday's closing price:
if close [today] is greater than close [yesterday]
price move [today] = close [today] -true range lLow
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]
In the book by Steven Achelis Technical Analysis A-Z, the volume factor is omitted.
Modifying the Williams AD:
You can modify the indicator by replacing the summing up with a moving average. This is the solution adopted for the ZLEMA version of the Williams AD in the download section. It comes with a period setting for the moving average. The ZLEMA version also does not take into account volume.
If you wish a version that comes with a period, you can take that ZLEMA version and eventually modify it:
-> replace the ZLEMA with a SMA (if you are allergic to ZLEMAs)
-> add volume into the equation (if you want to stay close to the original)
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