Williams' Percentage Range(%R)

Williams' percentage range trading indicator was created by Larry Williams
Williams' percentage range indicator is a type of momentum indicator that moves between 0 and -100 and is used to tell the trader about the oversold and overbought of the market
Williams' percentage range indicator is calculated using the following formula;

%R= Highest High- Close/Highest High-Lowest Low

Since Williams' percentage range is an oscillator indicator and ranges between 0 to -100,it follows to have its oscillation at between -20 to -80.When the percentage range is below -80 then it is an indication that the market is  oversold thus reversal of the market will take place thus the market will start moving upwards while when the percentage range is above -20 then it is an indication that the market is an overbought thus reversal of the market will take place thus the market will start moving downwards.Therefore,at below -80 where an upward market reversal will take place,the trader will be signaled to close any sell position and open a buy position since the market will be moving upwards while at above -20 where a downward market reversal will take place,the trader will be signaled to close any buy position and open a sell position since the market will be moving downwards.This is indicated as from the candle stick charts below;



From the candle stick chart above,the two adjoining red arrows represent the williams' percentage range .Point A with the big red arrow represent percentage range below -80 while point B represent percentage range at above -20.Since point A is below -80,then it follows that an upward market reversal will take place since that point represent an oversold market.This will signal the trader to close any sell position  position and open a buy position since the market will start moving upwards.
On the other hand,since point B is above -20,then it follows that a downward market reversal will take place since that point represent an overbought market.This will signal the trader to close any buy position and open a sell position since the market will start moving downwards.

Recommendation:If you are a day trader just use 1 min,5 min,15 min and 30 min time frame while if you are a swing trader just use 1 hour and above time frame if you want williams' percentage range to work well for you.


Comments

Post a Comment

Popular posts from this blog

MA cross

Image
MA cross is a trading indicator that is used to filter out noise from the price chart. MA cross can also be used by a trader to know the direction in which the price is moving. MA cross indicator is a trend indicator. MA cross is based on the crossover. Based on the crossover, MA cross has two moving average, the shorter term moving average and the longer term moving average. The shorter-term moving average is normally red in color and it represents the price while the longer term moving average is normally blue in color and it represents the moving average. Therefore, since MA cross is based on the crossover, it, therefore, follows that when the short term moving average crosses above the long-term moving average that will be an indication of an upward market movement thus the trader should be trading upwards. On the other hand, when the short term moving average crosses below the long-term moving average that will be an indication of a downward market thus the trader should b...
Read more

Least Square Moving Average(LSMA)

Image
Least square moving average is also called linear regression moving average. Least square moving average is a trend following indicator. Just like in other moving average indicators, least square moving average is also used to indicate the direction of the market, that is whether the market is trending upwards or downwards. Least square moving average is based on bullish and bearish market as well as support and resistance. Least square moving average is therefore calculated using the following formula; LSMA= h*t+b  where as h={(n Σt i x i ) -  ( Σt i Σx i )}/{(n Σt i ) - ( Σt i Σt i )} b=1/n Σx i -h*1/n Σt i while t is the time and n is the period Since least square moving average is a trend following indicator and is based on bullish and bearish, it therefore follows that when the market is in an uptrend movement,the least square moving average will also be moving upwards while when the market is in a downward trend, the least square moving average will...
Read more

fisher transform

Image
Fisher transform indicator was created by John  Ehlers. Fisher transform is used to transform time series data into a Gaussian Normal distribution function. Therefore in trading,fisher transform can be considered to be an indicator that is used to transform the price of any foreign exchange rate,price of securities ,price of commodities and price of stocks into a Gaussian Normal distribution . Fisher transform is an oscillator and therefore has oscillation at point 0.000 ranging from -1 to 1. Fisher transform is based on crossover.It therefore has two crossover lines,the fisher transform line which is blue in color and the signal line. Fisher transform is therefore calculated using the following formula; Fisher transform= 1/2*natural logarithm { (1+x)/(1-x) } NB; x is the transformation of price between the range of -1 to 1 Since fisher transform is based on crossover and has two crossover lines,the fisher transform which is blue in color and the signal line which i...
Read more