# Williams Accumulation Distribution Indicator for MT4

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## Introduction to the Williams Accumulation Distribution Indicator

Many traders believe that price movements are the most direction data that traders can use to identify bullish and bearish market pressures. Although the data on the price chart is a historic information of how price moved, it also gives valuable information as to how the market is viewing the value of tradeable instruments.

Having the same concept of price as the basis for detecting market pressures, Larry Williams developed the Williams Accumulation Distribution Indicator to help traders objectively gauge bullish and bearish market pressures using positive and negative price movements.

## What is the Williams Accumulation Distribution Indicator?

The Williams Accumulation Distribution (A/D) Indicator is a momentum indictor used to gauge bullish and bearish market pressures by comparing accumulation (positive) and distribution (negative) price movements.

This indicator plots a line on a separate indicator window. The line it plots shadows the movements of price action. Its line tends to move up whenever the momentum and trend is bullish. It also moves down whenever momentum and trend is bearish.

This indicator can be used to identify and confirm trending markets. The line it plots moves in a general upward movement whenever the market is in an uptrend, and downward whenever the market is in a downtrend.

## How the Williams Accumulation Distribution Indicator Works?

The Williams Accumulation Distribution algorithm uses a formula that incorporates volume and price.

First, it calculates for the Money Flow Multiplier (MFM) using the formula below.

MFM = [(Close â€“ Low) â€“ (High â€“ Close)] / (High â€“ Low)

Using the Money Flow Multiplier, it then for the Money Flow Volume (MFV).

MFV = MFM x Period Volume

It then calculates the Accumulation / Distribution (A/D) by adding the previous A/D with the current MFV.

A/D = Previous A/D + Current MFV

The resulting final A/D value is then plotted as a point on the Williams Accumulation / Distribution line.

## How to use the Williams Accumulation Distribution Indicator for MT4

The Williams Accumulation Distribution Indicator uses a formula which is fixed and does not have any variable input. As such, this indicator does not have any modifiable variable within its indicator settings.

When to Enter?

Compare the swing lows of price action with the dips on the Williams Accumulation Distribution line. Open a buy order as soon as a bullish divergence can be observed between its line and price action.

When to Exit?

Close the trade as soon as the Williams Accumulation Distribution line fails to create a higher high.

When to Enter?

Compare the swing highs of price action with the peaks on the Williams Accumulation Distribution line. Open a sell order as soon as a bearish divergence can be observed between its line and price action.

When to Exit?

Close the trade as soon as the Williams Accumulation Distribution line fails to create a lower low.

## Conclusion

The Williams Accumulation Distribution Indicator can be a very useful tool for identifying potential reversal signals based on divergences. The line that this oscillator plots tends to follow price movements very closely. As such, the divergences that can be observed between its line and price action can be few. However, the divergences that does surface often tend to be very reliable.

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