Williams %R

Williams %R, or just %R, is a technical analysis oscillator showing the current closing price in relation to the high and low of the past N days (for a given N). It was developed by trader and author Larry Williams and is normally used just in the stock market.

: $\%R\; =\; \{\; close\_\{today\}\; -\; high\_\{Ndays\}\; over\; high\_\{Ndays\}\; -\; low\_\{Ndays\}\; \}\; imes\; 100$

The oscillator is on a negative scale, from -100 (lowest) up to 0 (highest). Such a scale is a little unusual and is sometimes found altered (by adding 100), but needn't cause any confusion. A value of -100 is the close today at the lowest low of the past N days, and 0 is a close today at the highest high of the past N days.

Williams used a 10 trading day period and considered values below -80 as oversold and above -20 as overbought. But they were not to be traded directly, instead his rule to buy an oversold was

* %R reaches -100%.
* Five trading days pass since -100% was last reached
* %R rises above -95% or -85%.

or conversely to sell an overbought condition

* %R reaches 0%.
* Five trading days pass since 0% was last reached
* %R falls below -5% or -15%.

The timeframe can be changed for either more sensitive or smoother results. The more sensitive you make it, though, the more false signals you will get. The "close-position within a range" in the %R indicator is the same as the %K stochastic oscillator, on a different scale.

References

Further reading

* [http://www.analyzerxl.com/analyzerxl_functions_list.htm Demonstration of calculation of Williams %R] at analyzerxl.com