What it is
Williams %R was developed by Larry Williams. It answers one question: how close to the top of its recent range did price just close? A close right at the 14 candle high reads 0, a close right at the low reads minus 100, and a close in the middle reads minus 50.
It is the mirror image of the fast Stochastic %K, only flipped onto a negative scale and with no smoothing. That makes it quick and sensitive, which suits timing entries but means it gives plenty of false signals if used on its own.
How it is calculated
1. Find the highest high and lowest low of the last 14 candles. 2. %R = (highest high minus close) divided by (highest high minus lowest low), multiplied by minus 100. 3. If the high and low are equal, the reading is set to minus 50.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| Length | 14 | 2 to 200 | Candles in the high to low range. Shorter values swing between extremes more often; longer values reach them less often but with more meaning. |
How to read it
How to trade it
- 1
Use it with the trend. On a 15 minute gold chart, first confirm price is above its 50 period average.
- 2
Wait for %R(14) to fall below minus 80 on a pull-back, then buy the candle that closes with %R back above minus 80.
- 3
Place the stop a few points below the pull-back low, for example 5 to 8 points on 15 minute gold.
- 4
Take profit when %R reaches minus 20 or at 1.5 to 2 times the stop.
- 5
Mirror it for sells in a downtrend on US30: sell the cross back below minus 20.
A buy on the cross back above minus 80 is proved wrong if %R drops back below minus 80 and price closes below the pull-back low.
WickSpeak runs in your browser with nothing to install. When you add Williams %R, 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 explains where the close sits in the recent range, whether the line is turning out of an extreme, and how that fits the trend.
In Playbook, our no-code strategy builder, Williams %R can be a condition in a play. It can test whether Williams %R: 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 Williams %R. Its line is coloured by strength: faint when the push is weak, glowing when it is strong, mint above minus 50 and pink below it. Crosses of minus 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
Best for timing entries on 5 minute to 1 hour charts of gold, indices and forex, inside a trend that you identify with something slower.
Common mistakes
- Selling every reading above minus 20, which in a strong uptrend happens again and again.
- Forgetting the scale is negative, so minus 10 is higher than minus 90.
- Acting on the first dip below minus 80 instead of waiting for the cross back above it.
Works well with
Questions traders ask
Is Williams %R the same as Stochastic?
Almost. Williams %R is the fast Stochastic %K turned upside down onto a 0 to minus 100 scale, with no smoothing. That makes it quicker but noisier than the usual slow Stochastic.
What do minus 20 and minus 80 mean on Williams %R?
Above minus 20 price is closing in the top fifth of its recent range, which is called overbought. Below minus 80 it is closing in the bottom fifth, called oversold.
What is the best Williams %R setting?
14 is the standard. Some short-term traders use 10, and swing traders sometimes use 20 or more to cut down on signals.
Why is Williams %R negative?
Larry Williams measured how far the close is below the high of the range, so the reading counts down from 0 at the high to minus 100 at the low.