The William’s Percent Range indicator, which helps us detect the overbought and oversold regions and is in the Oscillator category, is known as William’s %R. This indicator which has regular oscillator characteristics and is easy to interpret according to extreme areas has been noted as one of the indicators that are especially remarkable in the short-term view, such as the Stochastic Oscillator.
-20 and -80 levels are significant figures we take as a reference while interpreting the indicator and according to these levels, it is explained the financial asset is in the overbought or overbought zone according to these levels. Moreover, for short term trade decisions, the returns that will occur depending on these levels are followed.
To access the William’s Percent Range indicator from the MetaTrader platform, you can respectively click on ToolBar, Insert, Indicator, and finally, on Oscillator.
Before adding it to the platform, you can revise the levels of -20 and -80 in the “Levels” section to make them suitable for the financial asset subject to trade. However, in the training, such change won’t be made and the standard pattern will be followed.
The Positive Or Negative Condition of William’s %R!
One of the most important things to pay attention to while making a trade decision for a financial asset is the reaction that will occur depending on the -20 and -80 levels. If the indicator is above the -20 level, it is OVERBOUGHT. If it is below the -80 level, it is OVERSOLD. A financial asset being in the overbought or oversold zone might be a signal for a possible return. However, you shouldn’t hurry for such a return solely based on this.
*** If William’s %R indicator returns from the oversold zone and goes above level -80 or makes a return from level -80 or its vicinity, the positive pricing behavior regarding the asset might grow stronger. With this, a possible exit request towards the reference level of -20 might keep the agenda busy.
*** If William’s %R indicator returns from the overbought zone and goes below level -20 or makes a return from level -20 or its vicinity, the negative pricing behavior regarding the asset might grow stronger. With this, a possible regression request towards the reference level of -80 might keep the agenda busy.
William’s %R – Divergence!
The incompatibility between the asset pricing and the Oscillator indicator, which helps us see the overbought and overbought zones might be on the agenda in some periods.
The concept elaborated as divergence is explained as the positive or negative signals according to the reference levels of -20 and -80 not being supported by the asset price.
In this section, considered as Positive Or Negative incompatibility, our main focus point is asset price. The related incompatibility removes the buy-sell signal until the price and the indicator are compatible.
If the Oscillator indicators which help us see the overbought and oversold zones are used alone, the times of incompatibility will affect trade performance negatively. Thus, no indicator should be used alone.
***William’s Percent Range indicator is crucial for traders who make trades. While the related indicator needs to be used in line with its theoretical approach, the probable revisions on the asset pricing are also of the essence to minimize the current risk. Also, since this indicator creates a very sensitive view against the sudden changes, it is a very important indicator for traders who make short term transactions. Since the indicator is from the Oscillator group which supports the overbought and oversold zones, it shouldn’t be forgotten that the divergence outlook will be in this category.