Williams %R

Williams %R, often called Williams Percent Range, is a momentum oscillator developed by trader Larry Williams. It shows where the latest close sits relative to the highest high and lowest low of a recent period. It is closely related to the stochastic oscillator but is plotted on an inverted scale from 0 to minus 100. Readings near 0 mean the close is near the top of the range; readings near minus 100 mean it is near the bottom.

The formula#

%R = (Highest high − Close) ÷ (Highest high − Lowest low) × (−100)

The default lookback is 14 periods.

Williams %R is mathematically the fast stochastic %K shifted by 100: a stochastic reading of 80 equals a %R of minus 20. The two indicators give the same information; %R is simply unsmoothed and inverted. See Stochastic Oscillator.

Overbought and oversold#

As with all oscillators, overbought does not mean price must fall. In strong uptrends, %R can stay near 0 for long periods, and Williams himself noted that strong markets often stay overbought.

How traders use Williams %R#

Momentum confirmation#

When %R repeatedly reaches near 0 during a rally, buyers are consistently closing price near the highs, a sign of strength. Failure to reach the overbought zone on a new price high can warn that momentum is fading.

Failure swings and exits from extremes#

A common signal is %R moving back out of an extreme zone: from below minus 80 back above it, suggesting selling pressure is ending, or from above minus 20 back below it, suggesting buying pressure is ending. Combined with support and resistance, these can time entries. See Support and Resistance.

Short term mean reversion#

Because it is unsmoothed and fast, %R is popular in short term mean reversion strategies, for example buying pullbacks in an uptrend when %R drops below minus 80, with tight time based exits. See Mean Reversion.

Settings#

• 14 periods: the standard.
• Shorter (such as 2 to 10): used for short term trading, very sensitive.
• Longer: smoother and fewer signals.

Limitations#

• Noisy: unsmoothed readings jump around, producing many signals.
• Trend dependent: overbought and oversold signals fail often in strong trends.
• Redundant with the stochastic: using both adds little new information.

Common mistakes#

• Shorting every reading near 0 in an uptrend.
• Forgetting the inverted scale and misreading signals.
• Using %R alone without trend or level context.

Frequently asked questions#

What does Williams %R show?#

Where the current close sits within the recent high to low range, on a scale from 0 (top) to minus 100 (bottom).

What is the difference between Williams %R and the stochastic oscillator?#

They use the same calculation idea. Williams %R is plotted on an inverted scale and is not smoothed, while the stochastic usually includes smoothing and a signal line.

What are overbought and oversold levels for Williams %R?#

Above minus 20 is generally overbought and below minus 80 is generally oversold.

Sources#

• Wikipedia, Williams %R