Williams %R

Larry Williams designed it to show 'distance from the high' with 0 at the top. Think of 0 as 'at the high' and -100 as 'maximum distance from high.' It's the same information as Stochastic %K, just inverted.

-20 is OVERBOUGHT (near 0). The scale is inverted: closer to 0 = overbought (price near high), closer to -100 = oversold (price near low). Don't let the negative numbers confuse you!

14 periods is standard and was Larry Williams' original recommendation. Use 7-10 for more signals (shorter-term) or 21-28 for fewer signals (longer-term). Start with 14.

Almost! %R = Stochastic %K - 100. They measure the same thing (close position in range) but %R is inverted. If you use Stochastic, you don't need %R and vice versa.

Yes, %R trading works in TFSA accounts. The typical holding period of 3-10 days is appropriate for registered accounts. Use proper position sizing.

1) Only trade deep oversold (below -90), 2) Wait for cross back above -80, 3) Use candle confirmation, 4) Add trend filter (above 50 MA), 5) Apply 3-period smoothing to %R.

Bullish failure swing: %R goes below -80, bounces to peak A, drops again but stays above -80 (fails to reach extreme), then breaks above A. The failure to make new low signals buyers are taking control.

Probably not - they're essentially the same indicator inverted. If you use Slow Stochastic, you get the added benefit of %D crossovers. %R is simpler (single line) if you prefer that.

Larry Williams' method: in uptrends (price above MA), buy when %R is oversold and turns up. In downtrends, sell when %R is overbought and turns down. Trade pullbacks, not reversals.

Conservative: %R reaching -50 (centerline). Aggressive: %R reaching -20 (overbought). Scaled: 50% at -50, 50% at -20 or reversal. -50 is more consistent; -20 captures more but may give back.

Scan for: %R crossed above -80 in last 2 bars, was below -90 recently, price above 50 MA, bullish candle present. Rank by %R depth (lower = better), divergence presence, and weekly alignment.

High volatility: use more extreme thresholds (-90/-10) to filter noise. Low volatility: use wider thresholds (-75/-25) for more signals. Can also use longer period (21) in high volatility.

Apply a 3-period SMA to raw %R to reduce noise. This creates a slightly lagging but smoother indicator. Some traders also create a 'signal line' similar to Stochastic %D.

More extreme = higher probability = larger size. Below -95: 100% of calculated position. -90 to -95: 80%. -80 to -90: 60%. This allocates capital to the best setups.

Well-designed systems achieve 45-55% win rates. The edge comes from sizing up on extreme readings and proper risk management. Profit factor should exceed 1.3.