Key Takeaways🔑
| →The Williams %R indicator is a widely used momentum indicator, especially valuable for identifying overbought and oversold conditions. |
| →At Olymp Trade, the Williams %R indicator is customizable, allowing traders to adjust the period, graph type, and the levels of overbought and oversold conditions. |
| →While the Williams %R indicator can provide helpful signals, it’s important to use it in conjunction with other indicators and analysis methods for the best results. |
Contents
The Williams %R indicator overview
The Williams Percent Range indicator is a momentum indicator with a range between 0 and -100. This oscillator was invented by Larry Williams. It indicates when the financial instrument reaches the overbought or oversold areas. It is assumed that an asset is overbought in case the Williams %R is beyond -20 and oversold when the indicator drops below -80.
This tutorial will teach you how to configure the Williams Percent Range indicator as well as how to use it in trading at Olymp Trade.
Configuring the Williams %R oscillator on the Olymp Trade platform
Once you are logged in to the Olymp Trade trading account, choose the financial instrument and the chart type. I am trading EURUSD currency pair on a 5-minute Japanese candlesticks chart. Now, find the graphical tool feature, click on it and a new window will pop up. Scroll down until you see oscillators. The Williams %R will be among them. The indicator is now attached to your chart.
You can adjust some of the indicator parameters. To do that, simply click the pen icon you will find in the oscillator window. You can change the period, graph type (check which suits you best), the thickness, and the color. Then you can activate the upper and lower bands, change their value and form.
Set the period at 14, the upper band should be at -20 as it will show you the overbought level, and the lower band at -80 for the oversold line.
Pros and Cons of Using Williams %R at Olymp Trade😀😔
Pros:
- Williams %R is useful for identifying overbought and oversold conditions.
- It can provide helpful signals for potential market reversals.
- Settings are customizable to suit individual trading strategies.
Cons:
- Williams %R can sometimes give false signals, particularly in choppy markets.
- It is a lagging indicator and may not always accurately reflect current market conditions.
- Reliance solely on the Williams %R without confirmation from other indicators can lead to poor trading decisions.
Comparison: Williams %R vs Other Trading Indicators
| Williams %R | Other Indicators |
|---|---|
| Efficient at detecting overbought and oversold conditions. | Effectiveness depends on the specific indicator and the market condition. |
| Can be used in conjunction with other indicators to strengthen signals. | Can also be used with other indicators, but the optimal combination depends on the specific indicator and strategy. |
How to use the Williams %R indicator in trading on the Olymp Trade platform
You should focus on tracking the indicator and determining the areas where it crosses the overbought and oversold levels.
Take a look at the example above. The Williams %R oscillator was beyond the -20 level. After some time it is coming back to the range. It signifies that the uptrend was exhausted and the bears stepped in. You should, therefore, open a short position. If you are using 5-minute interval candles, like in the example, you can hold the position open for even 30 minutes.
In the second example, the Williams %R was below the -80 level. As soon as you notice it crosses the line and moves above -80, you can be sure the bulls are taking the market over and it is time to buy.
Trading with the use of the Williams Percent Range indicator is pretty simple. You should definitely try it on your Olymp Trade practice account. If you’re already dealing with real money, always keep in mind that although useful, this strategy doesn’t eliminate risks in dealing with the market. Always be diligent, and be prepared to deal with losses.
Share the results in the comments section below.
Enjoy the trading!