Mastering Williams’ Percent Range (%R) for Trading Success

Williams’ Percent Range (%R) is a powerful technical indicator that helps traders identify overbought and oversold market conditions. Similar to the Stochastic Oscillator, the key difference lies in the presentation; %R uses an inverted scale.

When you look at the %R values, you’ll notice they’re displayed with a negative sign (for instance, -30%). Don’t let that throw you off—just ignore the minus sign while analyzing the data.

In general, if the indicator shows values between 80% and 100%, it suggests that the market is oversold. Conversely, values from 0% to 20% indicate an overbought market.

As with any overbought/oversold indicators, patience is key! It’s best to wait for the price to shift direction before executing your trades. For example, if the %R indicates an overbought condition, hold off on selling until the price starts to decline.

One fascinating aspect of the Williams %R is its knack for predicting price reversals. Often, the indicator will peak and start to drop a few days before the actual security price does. Likewise, it tends to form a trough and rise before the price turns up.

Williams’ Percent Range indicator

How to Calculate %R:

Here’s the formula for calculating the %R indicator, which closely resembles that of the Stochastic Oscillator:

%R = (HIGH(i-n) - CLOSE) / (HIGH(i-n) - LOW(i-n)) * 100

Where:

CLOSE - today’s closing price;
HIGH(i-n) - the highest price over the last number (n) of periods;
LOW(i-n) - the lowest price over the last number (n) of periods.

Mastering Williams’ Percent Range (%R) for Trading Success

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