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* %R drops below −5% or −15%. |
* %R drops below −5% or −15%. |
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The timeframe can be changed for either more sensitive or smoother results. The more sensitive you make it, though, the more false signals you will get. |
The timeframe can be changed for either more sensitive or smoother results. The more sensitive you make it, though, the more false signals you will get.<ref>{{cite web|url=https://currency.com/how-to-use-the-williams-percentage-range-indicator|title=How to use Williams %R indicator|website=Currency.com|date=August 31, 2021}}</ref> |
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==Notes== |
==Notes== |
Revision as of 08:42, 31 August 2021
Williams %R, or just %R, is a technical analysis oscillator showing the current closing price in relation to the high and low of the past N days (for a given N). It was developed by a publisher and promoter of trading materials, Larry Williams. Its purpose is to tell whether a stock or commodity market is trading near the high or the low, or somewhere in between, of its recent trading range.
The oscillator is on a negative scale, from −100 (lowest) up to 0 (highest), obverse of the more common 0 to 100 scale found in many technical analysis oscillators. A value of −100 means the close today was the lowest low of the past N days, and 0 means today's close was the highest high of the past N days. (Although sometimes the %R is adjusted by adding 100.)
Note
The original formula from his book multiplies the % with 100 instead of −100. It is possible that another book/magazine printed it incorrectly and this mistake spread out. Many softwares have already implemented it as −100.
Book reference: Williams, Larry. How I Made One Million Dollars… Last Year… Trading Commodities. Windsor Books. ISBN 978-0930233105.
Buy-/sell-signalling
Williams used a 10 trading day period and considered values below −80 as oversold and above −20 as overbought. But they were not to be traded directly, instead his rule to buy an oversold was
- %R reaches −100%.
- Five trading days pass since −100% was last reached
- %R rises above −95% or −85%.
or conversely to sell an overbought condition
- %R reaches 0%.
- Five trading days pass since 0% was last reached
- %R drops below −5% or −15%.
The timeframe can be changed for either more sensitive or smoother results. The more sensitive you make it, though, the more false signals you will get.[3]
Notes
Due to the equivalence
the %R indicator is arithmetically exactly equivalent to the %K stochastic oscillator, mirrored at the 0%-line, when using the same time interval.