Williams Percent R Indicator Trading Strategy

Williams percent R indicator is a momentum indicator that is the inverse of the Fast Stochastic Oscillator. It is an indicator that moves between 0 and -100. Williams percent R Indicator was developed by Larry Williams. This indicator is providing insight into the weakness or strength of a stock. Williams %R Indicator is used in various capacities including overbought or oversold levels. This indicator is also momentum confirmations and providing trade signals. In Williams percent R indicator, Readings from 0 to -20 are considered overbought. As the same way of this indicator, Readings from -80 to -100 are considered oversold. Williams percent R indicator reflects the level of the close relative to the highest high for the look-back period.

If the traders are want to get more details regarding the Williams percent R indicator, then please open the STUDIES section of Zerodha Kite. The traders are also visiting of this indicator in Kite mobile App. The Period is 14 and if you want to change the value of Period then you can change it. The traders can also check attaching process of the Williams %R indicator to Reliance Industries share price chart. This indicator is available includes daily, weekly, monthly or intraday.

Williams %R Trading Strategy

Calculation :

Calculating %R = (Highest High – Close) / (Highest High – Lowest Low) X -100

Where,

Highest High = This is the highest price over the look back period.

Lowest Low = This is the lowest price over the look back period.

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The final calculation of %R is multiplied by -100 correct the inversion and move the decimal.

Overbought/Oversold of Williams Percent R Indicator :

Williams %R indicator makes it easy to identify overbought and oversold levels. The oscillator ranges from 0 to -100. Williams percent R indicator will always fluctuate within this range. In this indicator, traditional settings use -20 as the overbought threshold and -80 as the oversold threshold. When the readings above -20 for the 14-day then Williams %R indicator would indicate that the underlying security was trading near the top of its 14-day high-low range. Although the readings below -80 occur when a security is trading at the low end of its high-low range.

In this indicator, it is important overbought readings are not necessarily bearish of before looking at some chart examples. Securities of Williams percent R indicator can become overbought and remain overbought during a strong uptrend. Closing levels that are consistently near the top of the range indicate sustained buying pressure of this indicator. As the same way, oversold readings are not necessarily bullish of this. Securities of Williams %R indicator can also become oversold and remain oversold during a strong downtrend. Closing levels consistently near the bottom of the range indicate sustained selling pressure of this indicator.

Williams %R Indicator Formula

How this indicator works :

  • Williams %R indicator moves between 0 and -100, which makes -50 the midpoint. In this indicator, Williams %R cross above -50 signals that prices are trading in the upper half of their high-low range for the given look-back period (Bullish). The chart reflects, across below -50 means prices are trading in the bottom half of the given look-back period (Bearish).
  • In the Williams %R indicator, the readings above -20 for the 14-day Williams %R indicator would indicate that the underlying security was trading near the top of its 14-day high-low range. Although, the readings below -80 occur when a security is trading at the low end of its high-low range. In the Default settings of this indicator, use -20 as the overbought threshold and -80 as the oversold threshold. These levels can be adjusted depending on the security’s characteristics of Williams %R indicator. 
  • When Williams % R indicator moves above -20 and then, in the next move up, fails to move above -20. Then this can indicate weakening momentum to the upside. In the conversation, when Williams % R indicator moves below -80 and then, in the next move down, fails to move below -80. This can indicate weakening momentum to the downside of this indicator.

Conclusions :

Williams %R indicator is a momentum oscillator that measures the level of the close relative to the high-low range over a given period of time. In addition to the signals mentioned above, the traders can use %R to gauge the six-month trend for a security. In this indicator, 125-day %R covers around 6 months. Prices are above their 6-month average when %R is above -50, which is consistent with an uptrend of Williams %R indicator. In the readings below -50 are consistent with a downtrend of this indicator. In this regard, %R can be used to help define the bigger trend which includes six months of Williams %R indicator. Like all technical indicators, this is important to use the Williams %R indicator in conjunction with other technical analysis tools.

Ankita has done her Diploma Engineering in Computer Science & Technology. She is pursuing her degree in Engineering and also well experienced in the equity market and real estate related content writing. She is the one who has developed the technical indicators section of our site.



Categories: Technical Indicators

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