Williams Percent Range Indicator |
Most of the basic MT4 indicators were developed in the 70-80s. And although the platform itself appeared much later, the developers decided to be content with an outdated base, giving traders the opportunity to modify the code. Logically, additional income for MetaQuotes owners. The Williams Percent Range indicator is a classic oscillator whose authorship has not been reliably established. According to the main version, the author is Larry Williams, according to the other, the developer of the stochastic is George Lane. The second version is supported by the fact that the stochastic uses the% K and% D lines. But the third line% R, which did not fall into the stochastic, is the Williams Percent Range indicator.
Williams Percent Range indicator: essence, formula, settings, opening deals
Williams Percent Range is an oscillator that is one line below the price chart and moves in the range from -100 to 0. The range is one of the differences from standard oscillators. The indicator formula is the ratio between the difference between the maximum price and the close price to the difference between the maximum and minimum prices.
The essence of the signals corresponds to the logic of the oscillators. Zones below -80 and above -20 are respectively oversold and overbought zones.
Signals Williams Percent Range:
- Exit of the indicator from the overbought and oversold zones inside the range… Getting into these zones is not yet a signal. For example, if% R rises above -20, but the trend continues its upward movement, you cannot open a deal – it is too early. A signal for a short position is a reversal of the indicator and crossing of the “-20” level from top to bottom.
Click on the picture to enlarge it.
At points 1-3, the open trades were more than successful. A trade opened at point 4 could be closed by stop due to a long growing shadow about 15 points long at 4-digit quotes. If the stop was moved in time, the trade would be closed in profit. At the 5th point, the signal was weak. This trade could have been closed manually the moment the Williams Percent Range returned to the oversold zone again.
- Divergence… Discrepancy between the direction of movement of the indicator and the price. Within the range “-20 – -80”, the discrepancy may indicate an exit from the flat, but the signal is considered weak. You need to catch the moment when the trend is still up, and the indicator in the overbought zone has already begun to reverse. Likewise for a downtrend. Recall that a “bullish” divergence with the prospect of opening a long position is drawn at the lows. “Bearish” – at the highs.
Currency pairs – any, timeframe – from H1. In comparison with the stochastic,% R gives more effective signals due to their unambiguous interpretation. There are only two variants of exact signals, while the stochastic has more of them. Beginners, for example, are confused by the need for a stochastic to combine two lines, range zones and price direction at the same time. % R has only one line – it’s easier. The rest of the trading principle is standard: add a trend indicator to the chart, draw strong support and resistance levels, and look for patterns. The oscillator is just an auxiliary tool.
Ask questions in the comments!