What is the Williams %R?
The Williams %R is named for its developer, Larry Williams. It is a momentum indicator that is mathematically equivalent to the fast Stochastic Oscillator. The only difference is that the Williams %R is the inverse of the fast Stochastic Oscillator. It signals overbought and oversold levels based on a range of 0 to 100. From 0 to 20 the oscillator signals a sell, and from 80 to 100 the oscillator signals a buy.
Calculation: [(Today’s Close- Highest High) / (Highest High-Lowest Low) ] X 100
The highest high and the lowest low will be based on the setting selected. The Williams %R is typically set to 14 periods, so the high and the low will be taken from that period.
How to Trade Using the Williams %R
Buy when the %R reaches 100 or when 7 trading days pass since the 100 was last reached. Sell when %R reaches 0 or when 7 trading days have passed since 0 was last reached.
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