What it is
Larry Williams created the Ultimate Oscillator to fix a common problem: single-length oscillators can be fooled by one sharp spike. By combining a short, medium and long window, a fast move has to be backed up over the longer windows before the line reaches an extreme.
Buying pressure is measured as how far each close sits above the lower of the low and the previous close, compared with the candle's true range. A close near the top of the true range is strong buying pressure.
How it is calculated
1. For each candle, buying pressure = close minus the lower of (low, previous close). 2. True range = the higher of (high, previous close) minus the lower of (low, previous close). 3. For each window (7, 14 and 28), average = sum of buying pressure divided by sum of true range. 4. Ultimate Oscillator = 100 times (4 times the 7 average + 2 times the 14 average + the 28 average) divided by 7.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| Short | 7 | 2 to 50 | The fast window, given the most weight (4). |
| Medium | 14 | 2 to 100 | The middle window, weight 2. |
| Long | 28 | 2 to 200 | The slow window, weight 1. It steadies the line. |
How to read it
How to trade it
- 1
On a 1 hour gold chart, look for price to make a lower low while the Ultimate Oscillator makes a higher low, with the first low under 30.
- 2
Mark the oscillator's highest point between the two lows.
- 3
Buy when the oscillator closes above that high.
- 4
Place the stop below the second price low, often 10 to 15 points on 1 hour gold.
- 5
Williams' exits: take profit when the line goes above 70, or exit if it falls back below 45 after rising above 50. On US30, mirror it for sells.
A divergence buy is proved wrong when price closes below the second low, or the oscillator drops back below its own second low.
WickSpeak runs in your browser with nothing to install. When you add the Ultimate Oscillator, it writes a plain-English reading on the live candle: what the indicator is, what it is doing right now, how to trade it and what would prove that reading wrong. It says where the line sits against 30, 50 and 70, whether it is rising or falling, and whether price and the oscillator disagree.
In Playbook, our no-code strategy builder, the Ultimate Oscillator can be a condition in a play. It can test whether the Ultimate Oscillator: crosses above a level you set; crosses below a level you set; is above a level you set; is below a level you set; is between two levels you set; is rising; is falling. Each condition can run on any of 12 timeframes from 1 minute to weekly, combined with up to 11 others, and the play can be backtested on past candles with your own costs and turned into alerts on screen, by email or by phone push.
There is also a WickSpeak Ultimate Oscillator. Its line is coloured by strength: faint when the push is weak, glowing when it is strong, mint above 50 and pink below it. Crosses of 50 are marked only once the candle has closed, so a marker never appears and then vanishes mid-candle. A gold marker shows a stretched reading, meaning the strongest few percent of its own range or a reading past a fixed extreme level. Divergences between price and the oscillator are drawn on both the chart and the indicator, and a chip shows the same reading on a higher timeframe.
Best markets and timeframes
Works on gold, indices and forex on 15 minute to daily charts. Divergence signals are rarer but more meaningful on 1 hour and above.
Common mistakes
- Selling every reading above 70, ignoring Williams' full divergence rules.
- Changing the three lengths so they overlap and lose the multi-timeframe point.
- Acting on divergence before the oscillator breaks its intervening high.
Works well with
Questions traders ask
What are the default Ultimate Oscillator settings?
7, 14 and 28 candles, weighted 4, 2 and 1. These are Larry Williams' original values.
What is a buy signal on the Ultimate Oscillator?
Williams' buy needs a bullish divergence where the oscillator's low is under 30, then a break above the oscillator's high between the two lows.
What is the difference between the Ultimate Oscillator and RSI?
RSI uses one window and compares up closes with down closes. The Ultimate Oscillator blends three windows and measures where each close sits within the true range.
Is the Ultimate Oscillator good for day trading?
It can be, because the long window filters spikes. On very short charts its signals are still noisy, so pair it with levels.