Williams %R
Williams %R is a momentum oscillator developed by trader Larry Williams in the 1960s. It measures where the current close sits within a recent high-low range and signals when prices reach overbought or oversold extremes. The indicator ranges from 0 to −100 and gives faster signals than RSI or Stochastic — useful for active intraday and swing traders in Indian markets.
Key takeaways:
- Williams %R ranges from 0 (highest close) to −100 (lowest close).
- Readings above −20 are considered overbought; below −80 are oversold.
- Default period is 14; can be shortened for faster intraday signals.
- Best used in ranging markets; less reliable in strong trends.
- Often combined with RSI or moving averages for confirmation.
Formula and meaning
%R = (Highest High − Current Close) ÷ (Highest High − Lowest Low) × (−100). The result is negative because of the formula, but the interpretation is straightforward: closer to 0 = close near the recent high (bullish momentum), closer to −100 = close near the recent low (bearish momentum).
Signals you can trade
- Overbought reversal: Williams %R rises above −20 and then turns lower — potential short signal in a range.
- Oversold bounce: %R falls below −80 and then rises — potential long signal in a range.
- Failure swings: Indicator fails to reach a new extreme along with price — classic divergence signal.
- Mid-line crosses: A move through −50 confirms a shift in short-term momentum.
Williams %R vs Stochastic
Both indicators measure the close relative to a recent range. The arithmetic is essentially the same, but Williams %R is unsmoothed and uses an inverted scale (0 to −100). Stochastic uses 0 to 100 and adds smoothing. Williams %R gives faster, but noisier, signals.
Practical example on a stock
Take a stock trading in a range of ₹450–₹490 over the last fortnight. Williams %R will swing between high and low values frequently. When %R hits −85 and rises back above −80, traders look for a long opportunity near support. Pair it with a candle reversal pattern for confirmation.
Where Williams %R fails
In strong trends, %R can stay overbought (above −20) for weeks. Selling each overbought signal during a bull run is a recipe for losses. Use ADX or moving averages to confirm whether the market is trending or ranging; trade Williams %R signals only when ADX is below 25.
Tips for Indian intraday traders
- On 5-minute Nifty charts, %R with period 9–10 gives quicker signals.
- Pair with VWAP to confirm intraday trend direction.
- Use the −50 mid-line to filter trades: only longs when %R > −50, only shorts when %R < −50.
- Avoid trading Williams %R signals during news-heavy minutes around 9:30 a.m. and 3:00 p.m.
Frequently asked questions
Is Williams %R the same as Stochastic?
Closely related, but Williams %R is unsmoothed and uses the −100 to 0 scale. Stochastic is smoothed and goes 0 to 100.
Can I use Williams %R on Nifty options?
On premium yes, but be careful — option premia decay over time, distorting range-based indicators.
What period works best?
14 is the default. Intraday traders often use 9 to 10; positional traders may extend to 21.
Should I trade purely on %R?
Most successful traders combine it with trend filters and price-action confirmation.
