Williams Percent Range indicator guideline
Williams Percent Range ( WPR ) MT4 indicator is also called the Williams %R indicator and it demonstrates oversold and overbought areas in the market. In fact, it works very similarly to volatile oscillators. This Percent Range strategy was developed by the trader Larry Williams. Forex traders use the Williams Percent Range ( WPR ) MT5 indicator to determine entry and exit junctures in trading. It compares the close price to the high/low range over a certain period of time. This period of time presents the parameter of WPR, which is 14 days per default. The WPR is a very popular Williams Percent Range indicator in Tradingview because of its ability to indicate a trend reversion in the future. Forex traders do not just use it to anticipate price movement reversals, but also to determine overbought and oversold grades.
Williams Percent Range indicator
What is the Williams Percent Range indicator?
Williams Percent Range, %R, or percent R is a technical analysis tool invented by the author and trader Larry R. Williams. He published it in his book How I Made One Million Dollars Last Year Trading Commodities. We can use this range indicator with multiple currencies and cryptocurrencies also. Such as stocks, the FX market, and cryptocurrencies. Like every indicator, the WPR has a logic behind it. The concept is that the more the price moves to the highest high of the high/low range of the period, the higher the WPR will be and vice versa. When the price touches the highest high, the indicator will hit 0. On the opposite, if the price drops to the lowest low of the range, it will fall to -100.
How do you calculate Williams R?
We can calculate the Williams Percent Range as follows:
- WPR = ( Highest High – Close ) / ( Highest High – Lowest Low ) x -100
The highest high and lowest low present both prices high/low during the period. The creator of this indicator Williams used 10 days in his strategy. But the choice depends on the platform. Also, we can apply it for different time frames.
Advantages of the indicator
There are several benefits of using the Williams Percent Range indicator.
- Easy to calculate.
- Included in most trading platforms.
- Complements the Stochastic indicator.
- Easy to interpret.
The main disadvantage of the Williams Percent Range indicator is that it can remain in the oversold and overbought levels for an extended period.
Williams Percent Range Strategy
The Williams Percent Range oscillator is a straightforward WPR strategy. The most effective WPR strategy consists of buying the chosen asset when the indicator moves above -80. Likewise, we should sell the asset when the indicator falls below -20. To explain, if the WPR moves from -80 to 0, we can predict a bullish tendency. In this situation, we can take a long position and wait for the price to keep increasing. We should hold this position until the WPR moves above -20. At this point, we get a sell signal. This can serve as a sign to sell and collect profits. Contrarily, when the WPR moves from -20 down to -100, we get a bearish signal. In this case, we can go short and speculate on a falling price. Once the WPR goes under -80, this creates a buy signal. Hence, we close our short position.
How do you use a Williams range?
Forex traders use the Williams %R indicator in order to get insights into whether the currency pair is in an “overbought” or “oversold” area in the FX market. In fact, the Williams percent range strategy depends on the value of this oscillator in order to detect which market participants are accumulating.
Overbought and oversold areas
We usually consider a move above -20 to 0 as a signal that the asset is overbought. Consequently, triggering a sell signal. Also, a move below -80 towards -100 indicates that the asset is oversold. In the graph below, we highlighted the overbought and oversold areas using the WPR indicator:
It is important to note that just because the WPR goes into the overbought or oversold area, it does not always mean that a tendency to reverse will happen. What it technically means is that overbought conditions are close to the top of the WPR. Similarly, when the WPR reaches the oversold area, that means that prices are close to the bottom of the recent range.
Williams Percent Range indicator for MT4
The Williams Percent Range MT4 indicator is a WPR indicator for MetaTrader 4 that can be used for various dimensions in order to help us to know strength confirmations, overbought and oversold readings, the power of the trend, and finally potential buy and sell signals. Just like all overbought and oversold tools, we prefer to wait for the price to change direction before taking positions. To explain, when the WPR shows us an overbought condition, we should wait for the security’s price to turn down before selling the security. The MT4 graph below is an example of a short position using the Williams Percent Range ( WPR ) indicator.
Williams Percent Range indicator for MT5
The Williams Percent Range for MT5 indicator is a WPR indicator for the MetaTrader 5 terminal. A very interesting phenomenon of the WPR indicator is its great ability to predict reverses at the underlying asset’s price. The indicator will form a peak, and turn down some days before the asset’s price peaks and then turns down. Also, Williams Percent Range usually creates a trough and turns up some days before the asset’s price turns up as an MT5 lagging indicator. In this graph we can how the WPR oscillator did predict a reversal in the price movement almost a day before:
Williams Percent Range indicator for TradingView
The Williams percent range indicator is pre-installed in the TradingView platform. To find it, we click on Indicators, which is located at the top of the platform. After that, we search for the WPR. It should be present as the first indicator after the search. As we mentioned earlier, the default parameter of this WPR indicator is 14 days. In this window, you can modify the period length. Also, we can change the source price. To explain, we can choose the close price, open price, high or low price.
We can see in the following picture, the Williams Percent Range curve of the indicator on a Tdaingview chart.
WPR indicator is one of the best strength indicators used in technical analysis. It is a very effective trading tool among a number of technical indicators. We recommend using the indicator as a filter when working with other technical indicators. In this case, its use will be as effective as possible.
- The Williams Percent Range is an oscillating indicator in Tradingview.
- Its values vary between 0 and -100.
- Values over -20 can indicate overbought markets.
- Values under -80 can indicate oversold markets.
- The most utilized timeframe for this indicator is 14 days.
- A sell signal occurs when WPR reaches the area between -20 and 0.
- A buy signal occurs when WPR reaches the area between -80 and -100.
- The lower bound – minimum price – corresponds to level (-100).
- The higher bound – maximum price – corresponds to level 0.