Williams Percent Range - What is %R


%R Definition

Williams Percent Range (%R) is a technical indicator developed by Larry Williams to identify whether an asset is overbought or oversold and therefore to determine possible turning points. Unlike the Stochastic oscillator Williams Percent Range is a single line fluctuating on a reverse scale.

How to use Williams Percent Range in trading platform.

For more information how to set the indicator in the terminal please click here.

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How to Use %R

The main goal of Williams Percent Range is to identify possible overbought and oversold areas, however the indicator should be considered within trend analysis:

  • Generally if the indicator climbs above -20, the asset may be overbought;
  • If the indicator drops below -80, the asset may be oversold.

Leaving extreme areas the indicator may suggest possible turning points:

  • Crossing the overbought boundary from above, Williams Percent Range signals a possible sell opportunity;
  • Crossing the oversold boundary from below, Williams Percent Range signals a possible buy opportunity.

Divergence patterns are rare, but may indicate possible trend weakness:

  • If the price climbs to a new high, but the indicator does not, that may be a sign of the uptrend weakness;
  • If the price falls to a new low, but the indicator does not, that may be a sign of the downtrend weakness.
Williams Percent Range Indicator

Williams Percent Range Indicator

Williams Percent Range strategy

Williams %r indicator, as already mentioned, helps to determine the points when the market is oversold or overbought. The trading rules of Percent Range strategy are simple:

  • Buying when the market is oversold (%R reaches -80% or lower);
  • Selling when the market is overbought (%R reaches -20% or higher).

Williams %R Formula (Calculation)

To calculate the WPR indicator, the difference of the high price and the closing price over a period is divided into the difference of the high and low prices over a period. The default period is equal to 14 (the last 14 bars from the considered price chart).


R% = - ((H - C)/(H – L)) x 100;

where:
C – latest close price;
L – the lowest price over a given period;
H – the highest price over a given period.

How to set up indicator Williams Percent Range in trading platform

Use indicators after downloading one of the trading platforms, offered by IFC Markets.

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