– Williams Percent R Indicator-haywire

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 We 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’s basic rule is simple. When the %R reaches 20% or lower it is interpreted as a sell signal, and conversely when the %R goes to 80% 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 for the %R, 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. Calculation: Parameters: Period (10) – The number of price bars, or the interval, used to calculate the study. Common Formula: You must first determine the highest high and lowest low for the length of the interval. This is the trading range for the specified interval. The general formula for the %R is as follows: %Rt = ( (Highn – Closet) / (Highn – Lown) ) * -100 %Rt: The percent of the range for the current period. Highn: The highest price during the past n trading periods. Closet: The closing price for the current period. Lown: The lowest price during the past n trading periods. n: The length of the interval. Example: Assume the market is Treasury Bills. The high for the past ten trading intervals is 9275, and the low is 9125. The closing price in the current period is 9267. If you substitute those values in the equation, you get: %R = ( (9275 – 9267) / (9275 – 9125) ) * 100 = (8 / 150) * 100 = 5.33 Updated Formula: %Rt = ( (Closet – Lown) / (Highn – Lown) ) * -100 About the Author: My name is David Duty and I am the author of Common Sense Commodities Courses for both the Futures and Options markets. I’m a Commodity Trading Advisor and I’ve been teaching people to trade commodities for the past 10 years. Visit .www.commonsensencommodities.com for more information. Article Published On: ..articlesnatch.. – UnCategorized – – – – – – – – – – 相关的主题文章: