Williams %R
The stochastic oscillator's mirror twin, just with the scale flipped: from 0 to −100.
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Text version · Oscillators & Momentum, lesson 4: “Williams %R”
The stochastic oscillator's mirror twin, just with the scale flipped: from 0 to −100.
Same shape, flipped scale
Williams %R measures "how far the close is from the high," on a scale from 0 to −100: above −20 is overbought, below −80 is oversold. It differs from the stochastic %K by exactly 100.
Sensitive, so filter it
%R catches short-term turns quickly, but in a trend it keeps giving counter-trend signals. Adding a trend filter (such as the SMA50) blocks a lot of false signals.
It's only a signal once it leaves oversold
%R dropping below −80 only means the close is near the bottom of the range. It only counts as a signal when it climbs back above −80 (leaving oversold) or falls back from above −20 (leaving overbought). In a strong trend it can stick near 0 or −100 for a long time.
Key takeaways
- %R = (N-day high − close) ÷ (N-day high − N-day low) × −100. It measures how far the close is from the high.
- Above −20 is overbought; below −80 is oversold.
- %R has exactly the same shape as the unsmoothed stochastic %K, just shifted by 100.
- %R reacts quickly and suits catching short-term turns, but it needs a trend filter (such as only trading in the direction of the SMA50) to block counter-trend signals.
Try it yourself
You can do these exercises in this lesson's interactive simulation:
- Move the cursor to find a candle with %R ≈ −90: is it in the overbought or oversold zone? What's the matching %K?
- Click "Flip %R" and watch the purple line line up exactly with the cyan one. How are the two related?
- In "Rally, then fall," turn on "Only trade with the SMA50": how do the signal count and the false signals change?
- Switch to "Choppy" and turn the filter on again: does the filter still help? What does it block?
Quiz and explanations
- 1. %R = −90 is in…
- Answer: The oversold zone.Below −80 is oversold.
- 2. How does %R relate to the stochastic %K?
- Answer: Same shape, flipped scale.%R = %K (unsmoothed) − 100.
- 3. In a downtrend with price below the SMA50, %R drops to −85. Under a "trade only with the trend" filter, you should…
- Answer: Skip this oversold buy signal.When the trend is down, an oversold buy is a counter-trend signal, and the filter blocks it.
Terms in this lesson
- false signal (False Signal): An indicator gives a signal, but price doesn't move the way it suggested.
- oversold (Oversold): An indicator reading near the bottom, meaning price has fallen a lot recently, though it won't necessarily bounce right away.
- Williams %R: An oscillator from 0 to −100; above −20 is overbought, below −80 oversold.