Williams Percent R

Indicator Type: Counter Trend

Introduction:
Larry Williams, originally used a ten-day interval, and plotted where the current price compared to that interval. He used it to measure conditions of overbought and oversold. The overbought region is the area below 20% and the oversold region is the area above 80% - with the ability to invert the values it can be looked at in the same manner as other overbought/oversold indicators (note: we will use the traditional method, not the inverted in our discussions). Choosing the time period, which the indicator looks at, the interval for the indicator is crucial to finding the optimal sensitivity.

Interpretation:
Williams basic rule is simple when the %R reaches 10% or lower it is a sell signal, and conversely when the %R goes to 90% or higher a buy signal is activated.

Changing the sensitivity of the indicator to work for you is essential to making the study a better tool. The longer the period %R looks at the less sensitive it will be. The indicator will move less but will be more smoothed. A number of technical traders use a value that is less volatile, in other words a larger value. Many traders find it better to use a strategy where the market leaves the areas of overbought\oversold before entering a trade position. In either case using solid exit strategies is important with this indicator.
 

Program Options - Williams Percent R

  1. Display %R Indicator:  To display the indicator in the chart window, click the check box.  You may also select the %R Indicator from the shortcut buttons or the right-click menu in the Indicator Window.  To invert the William's %R Indicator, check the click box in front of the text, Invert Line.
  2. Period:  To specify the number of days used in calculating the %R simply click on the box, highlight the current number and type in a new value. Be sure to click on Ok to save your changes.
  3. Style: The %R line can be displayed as a solid, dashed, or dotted line.  Click on the drop down menu to specify the type of line style desired.
  4. Color:  Click on the color box and a color panel will open for you to specify the new color.
  5. Ruler Bar:  The Ruler Bar allows user's to create highlighted regions or horizontal lines within the indicator window.  To create a highlighted region, click at either end of the Ruler bar and drag either up or down to the end point of the region.  To place a line, click in side the ruler bar and drag the line to the desired point.  See screen shot below:


    Ruler Bar
     
  6. Preview Window: This Window allows you to make changes and preview them before saving them.
  7. Use Relative Scale: When choosing this option, the 100% location is changed to the highest point value of the Williams' Percent R Indicator.
  8. Restore Defaults: To bring the %R Indicator to the Default Settings, click on the Restore Defaults button.
  9. Documentation:  This section contains instructions on using the %R Indicator.