• Skip to primary navigation
  • Skip to content
  • Skip to primary sidebar
  • Skip to footer
StoneX®

Trade Futures, Spreads and Options with Confidence.

Top Navigation

  • Open a Futures Account
  • Sign Up
  • Log in
  • 1.800.800.3840

Primary Navigation Menu

  • About
    • Who We Are
    • Services
    • Risk Disclosure
    • COVID-19
  • Trade
    • Broker-Assisted
    • Self-Directed / Online
    • Request Pricing
  • Hedge
    • Ag Marketing Plan
    • WASDE Analysis
    • Grain Resources
    • Livestock / Dairy Resources
    • Request Pricing
  • Invest
    • Automated Strategies
    • Managed Futures
    • Request Pricing
  • Advisories
    • GENERAL / FUNDAMENTAL
      • DT Newsletter
      • Insider Market Advisory
      • Turner’s Take Newsletter & Podcast
    • TECHNICAL ANALYSIS
      • The Cullen Outlook
      • Data Feed Trade
      • Jarboe Trading Journal
      • Trade Spotlight
    • AG MARKETING
      • Cattleman’s Advisory
      • Technical Ag Knowledge
      • Turner’s Take Ag Marketing
    • THIRD-PARTY RESOURCES
      • CFRN
      • Moore Research Center, Inc. (MRCI)
      • OptionWorks®
      • TASMarketProfile.com
  • Education
    • CME Group Resource Center
    • CME Group Offers
    • Small Exchange Resources
    • Guides
    • Frequently Asked Questions
    • Order Entry Handbook
  • Blog
    • Futures 101
    • Ag Marketing
    • Tips & Strategies
    • Trading Advisories
  • Resources
    • Trading Software
    • Quotes and Charts
    • Futures Calendars
    • Contract Specifications
    • Margin Requirements
    • Futures Calculator
  • Accounts
    • Apply
    • Access My Account
    • Funding
  • Contact
Home / Education / Technical Analysis Learning Center / Williams’ %R

Williams’ %R

The Williams’ %R, developed by Larry Williams, is very similar to the Stochastic Study, except that the Stochastic has internal smoothing whereas the %R is plotted on an upside-down scale, with 0 at the top and -100 at the bottom. (To show that the %R is plotted in this fashion, the software places a negative sign before the %R values. For the purposes of this discussion, ignore the negative sign.) The %R oscillates between 0 and 100%; a value of 0% shows that the closing price is the same as the period high. Conversely, a value of 100% shows that the closing price is identical to the period low.

The Williams’ %R is designed to show the difference between the period high and today’s closing price with the trading range of the specified period. The study, therefore, shows the relative situation of the closing price within the observation period.

Download our free guide, Futures Trading: Technical Analysis for Beginners,  today!

Properties

Period. The number of bars in a chart. If the chart displays daily data, then period denotes days; in weekly charts, the period will stand for weeks, and so on. If you specify a small value for the length of the trading range, the study may become volatile. Conversely, a large value smoothes the %R, and it generates fewer trading signals. The application uses a default of 10.

Interpretation

Noted author and commodity trader, Larry Williams, developed a trading formula called the %R. In his original work, the method examined ten trading days to determine the trading range. Once the ten day trading range was determined, he calculated where today’s closing price fell within that range.

The system attempts to measure overbought and oversold market conditions. The %R always falls between a value of 100 and 0. The trading rules are simple. You sell when %R reaches 20% or lower and buy when it reaches 80% or higher. However, as with all overbought/oversold studies, it is wise to wait for the instrument’s price to change direction before placing a trade. If an overbought/oversold study, such as the Stochastic or Williams’ %R, shows an overbought level, the best action is to wait for the contract’s price to turn down before selling. For examining the contract’s price, the MACD study is a good technical study. Selling simply because the contract seems to be overbought may take a trader out of the instrument long before the price falls, because overbought/oversold studies can remain in an overbought/oversold condition for a long time even though the contract’s prices continue to rise or fall.

Please note that these values are reversed from normal thinking, especially if you use the RSI as a trading tool. The %R works best in trending markets, either bull or bear trends. Likewise, it is not uncommon for divergence to occur between the %R and the market. It is just another hint of the market’s condition.

Williams defines the following trading rules for his %R:

Buy when
  • Williams’ %R reaches 100%, and
  • five trading days have past since 100% was last reaches, and
  • after which the Williams’ %R again falls below 85/95%.
Sell when
  • Williams’ %R reaches 0%, and
  • five trading days have past since 0% was last reached, and
  • after which the Williams’ %R again rises about 15/5%.

Literature

Williams, Larry. How I Made $1,000,000 Last Year by Trading Commodities. Windsor Books. NY. 1979.

Colby, Robert F., Myers, Thomas A. The Encyclopedia of Technical Market Indicators. Dow Jones – Irwin. Homewood, IL. 1988.

Murphy, John J. The Visual Investor. New York, NY: John Wiley & Sons, Inc. 1996.

Content Source: FutureSource

Read our guide, Futures Trading: Technical Analysis for Beginners

View Other Technical Analysis Studies

  • Bollinger Bands
  • Commodity Channel Index
  • Crack Spread
  • Crush Spread
  • Default
  • Directional Movement Index
  • Envelope
  • Exponential Moving Average
  • Exponential Oscillator
  • High Low Moving Average
  • Highest High / Lowest Low
  • Historic Volatility
  • Keltner Channel
  • Least Squares Linear Regression
  • Line Oscillator
  • Momentum
  • Moving Average
  • Moving Average Convergence Divergence
  • Moving Standard Deviation
  • Open Interest
  • Oscillator
  • Parabolic Stop and Reversal
  • Rate of Change
  • Relative Strength Index
  • Smoothed Moving Average
  • Smoothed Oscillator
  • Stochastic
  • Variable Moving Average
  • Volume
  • Volume and Open Interest
  • Weighted Close
  • What is the Slow Stochastic Oscillator? 

Primary Sidebar

Tips & Strategies

How Does Inflation Affect Markets?

The highest inflation measure in more than 40 years has left many markets in utter disarray: Nasdaq is at its lowest since 2020, interest rates are their highest since 2007, and the US dollar is the strongest it’s been since the early aughts

The End of an Era for the Euro

If you started trading in the last two decades, you’ve only known a world in which the euro is worth more than the US dollar. You’d have to go all the way back to 2002 to find data points representing the EUR/USD conversion rate that start with a zero to the left of the decimal point.

Charts

Probabilities are Accurate Until They Aren’t

What do all the probabilities in your life have in common? They’re all dynamic – constantly changing. At the conclusion of the event a binary 0% or 100% is realized, but the journey to that ending can witness wild swings in either direction….

More Tips & Strategies

  • How the Fed Affects Interest Rates
  • Neutral Trading Strategies for an Inactive Market
  • Technical Analysis 101: What Is the Parabolic SAR?
  • OHLC Charts vs. Candlestick Charts: Which Is Better?
  • How to Harness the Power of Moving Average Crossovers
  • Technical Analysis of Stocks: Understand the Pros and Cons
Trustpilot

Footer

Site Navigation

  • Frequently Asked Questions
  • About Us
  • Customer Reviews
  • Contact Us
  • Futures Blog
  • Open a Futures Trading Account
  • Media Resources
  • Fund Your Account
  • Legal Notices

Contact Us

StoneX Financial Inc.
Daniels Trading Division
230 South LaSalle Suite 10-500
Chicago, IL 60604
+1.312.706.7600 Local / Int'l
+1.800.800.3840 Toll-Free
+1.312.706.7605 Fax

Connect with Us

Trustpilot
Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

  • Risk Disclosure
  • Privacy Policy
  • California Residents Privacy Notice
  • Terms of Use
  • Back to top