Top 5 Williams %R Trading Strategies for Olymp Trade.

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What is the Williams %R?

Williams %R stands for Williams Percent Range.

The Williams Percent Range is a technical indicator that compares the closing price of an asset to the high – low range over a given number of periods.

By doing so, the indicator acts to measure and show the price momentum with which price reversals occur.

The tool also measures the price momentum of the price of a continuing trend, not necessarily a trend reversal.

Components of the Williams %R.

The Williams %R comprises the following components:

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  • A central -50 level acting as a zero line.
  • The upper limit (-20).
  • Lower limit (-80).
  • A curve, area, dots, or histogram moving along the scale from -100 to 0.

What is the Williams %R

Basic Signals Provided by the Williams %R.

As we had mentioned earlier, the Williams %R compares the closing price of an asset to the high-low range in order to show the price momentum with which price reversals occur.

Meaning, some of the basic signals provided by the tool are bullish and bearish in respect to the momentum with which a price reversal occurs.

That is not all though.

We also mentioned that the Williams %R can also be used to establish the price momentum of a continuing trend and not always a trend reversal in this post beginning with: –

  1. Price Reversal Momentum.

The first thing the Williams %R establishes in respect to the determination of price reversal momentum is the possibility of a price reversal.

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It will then proceed to show the momentum of such reversal.

  • Determining Possibility of Price Reversal.

So how does the Williams %R establish the possibility of a price reversal?

By way of overbought and oversold conditions. 

Note: – the William%R indicator has an upper limit (-20) and a lower limit (-80).

Basically, when the indicator curve, area, dots, or histogram is reading above the upper limit (-20), then such is an overbought condition.

It means that the buyers are losing grip and may have possibly exhausted their resources.

Consequently, sellers are warming up to storm the market and cause a downward price reversal.

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On the other hand, when the indicator curve, area, dots, or histogram is reading below the lower limit (-80), then such is an oversold condition.

It means that the sellers are losing grip and may have possibly exhausted their resources.

Consequently, buyers are warming up to storm the market and cause an upward price reversal.

Determining Possibility of Price Reversal on William%R

  • Establishing Momentum of Price Reversal.

Are you done establishing a condition of possible price reversal using the Williams %R?

The next thing to do is to determine the momentum the price reversal will occur with so that you can decide whether to trade in the direction of the reversal or not.

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If the price is below the lower limit (-80) and crosses the limit rapidly upwards, then the price has reversed upwards with huge momentum.

It is likely to sustain such upward momentum for a while enough to profit.

On the other hand, if the price is above the upper limit (-20) and crosses the limit rapidly downwards, then the price has reversed downwards with remarkable momentum.

The price is likely to sustain such downward momentum for a while enough to profit.

Establishing Momentum of Price Reversal With William%R

  1. Continuing Trend Price Momentum.

Establishment of the price momentum of a continuing trend is the easiest thing that the Williams %R can do.

It is as simple as a cross above or below the central -50 level.

Basically, a cross of the Williams %R curve, area, dots, or histogram from below to above the -50 level is indicative of upward price momentum.

And, a cross of the Williams %R curve, area, dots, or histogram from above to below the -50 level indicates a downward price momentum.

Continuing Trend Price Momentum.

Williams %R Trading Strategies.

The Williams %R has been a popular technical indicator since long ago and has been in use by traders including Olymp Trade traders. 

Meaning, a big number of traders have tried the tool time and again and used it to formulate trading strategies.

Some of the strategies have seemed to work but failed shortly after while some have stood the test of time and are still effective and profitable hitherto.

The Williams %R is among the best oscillators, available on the Olymp Trade platform

Apply it to your chart and use the strategies that we will discuss in this post to improve your earnings.

Top 5 Williams %R Trading Strategies.

We have already mentioned that some of the thousands of the trading strategies drafted around the Williams %R have perennially failed while others have been thriving.

The markets are dynamic and only favor trading strategies in such a way that only the fit systems survive.

Do you desire to hear the story of trading strategies based on the Williams %R which have survived and proven effective and profitable over time?

Here is my list of the top 5 Williams %R trading strategies for Olymp Trade:

  • The Williams %R Trading Strategy.
  • Williams %R with EMA Trading Strategy.
  • The Williams %R Divergence Trading Strategy.
  • Williams %R with Support and Resistance.
  • The Williams %R Trend Riding Strategy.
  1. The Williams %R Trading Strategy.

Are you shocked that the Williams %R can singlehandedly form a trading strategy? Please don’t be.

Here’s how it works.

Step 1 – Signal.

The first step of this strategy is the identification of trading signals.

The signals here will be obtained from the Williams %R of course.

Here are the bullish and bearish signal specifications:

  • Bullish signal – the Williams %R curve, area, dots, or histogram must be reading below the lower limit (-80).

This is an oversold condition meaning that the sellers are losing grip and may have possibly exhausted their resources.

Consequently, buyers are warming up to storm the market and cause an upward price reversal.

The Williams %R Trading Strategy.

  • Bearish signal – the Williams %R curve, area, dots, or histogram must be reading above the upper limit (-20).

This is an overbought condition meaning that the buyers are losing grip and may have possibly exhausted their resources.

Consequently, sellers are warming up to storm the market and cause a downward price reversal.

Step 2 – Confirmation.

This strategy is based on overbought and oversold conditions.

If you have been trading in Olymp Trade for some time now, you understand that the price can remain overbought or oversold almost forever, and never reverse anytime soon.

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That said, you need to be sure that the price is actually going to reverse after attaining the overbought or oversold conditions.

The same tool, Williams %R, is used to confirm the signals it provided as follows:

  • Bullish signal confirmation – the Williams %R curve, area, dots, or histogram which is below the lower limit (-80) must cross the limit rapidly upwards.

An upward rapid cross of the lower limit means that the price has reversed upwards with huge momentum.

It is then likely to sustain such upward momentum for a while enough to profit.

  • Bearish signal confirmation – the Williams %R curve, area, dots, or histogram which is above the upper limit (-20) must cross the limit rapidly downwards.

A downward rapid cross of the upper limit means that the price has reversed downwards with huge momentum.

It is then likely to sustain such downward momentum for a while enough to profit.

The Williams %R Signal Confirmation.

Step 3 – Entry.

Enter a buy position following a confirmed bullish signal and a sell position following a confirmed bearish signal.

Step 4 – Exit.

Exit the buy position once the Williams %R curve, area, dots, or histogram dips below -50 from above.

On the other hand, exit the sell position if the Williams %R curve, area, dots, or histogram rises above -50 from below.

  1. Williams %R with EMA Trading Strategy.

This strategy blends together the Williams %R indicator and the Exponential Moving Average (EMA) to trade profitably.

Now that we have said enough about the Williams %R, why don’t we proceed to talk about the Exponential Moving Average (EMA)? 

Exponential Moving Average (EMA).

The Exponential Moving Average is a technical indicator that calculates and shows the average of a given range of prices of an asset over a specified number of periods.

In this strategy, the EMA used is applied in default settings of 10 periods.

EMA is different from other moving averages because it places a greater significance on the most recent data in its calculation, making it a more preferable moving average.

EMA presents in the form of a continuous line on the main chart.

The calculations are presented in the form of a line connecting the results of the calculations in a smoothed continuous line.

When the EMA is sloping upwards and the price is trading above it, then the market is on an uptrend.

However, when the EMA is sloping downwards and the price is trading below it, then the market is on a downtrend.

The Williams %R with EMA Strategy.

The primary tool in this strategy will be the EMA, which we shall use to obtain trading signals.

We can then confirm the signals using the Williams %R. Ready for this? Here we go.

Step 1 – Signal.

The first step of the strategy is the generation of a trading signal using the EMA. The EMA gives both bullish and bearish signals in the following manner:

  • Bullish EMA signal – the Exponential Moving Average must be sloping upwards and the price having crossed to trade above it.
  • Bearish EMA signal – the Exponential Moving Average must be sloping downwards and the price having crossed to trade below it.

The Williams %R with EMA Strategy.

Step 2 – Confirmation.

Do you have either a bullish or bearish EMA signal? You must then subject it to a confirmatory test using the Williams %R indicator. Here is how to do so:

  • Bullish signal confirmation – the Williams %R curve, area, dots, or histogram must cross from below to above the -50 level.

Alternatively, the Williams %R curve, area, dots, or histogram which is below the lower limit (-80) must cross the limit rapidly upwards.

  • Bearish signal confirmation – the Williams %R curve, area, dots, or histogram must cross from above to below the -50 level.

Alternatively, the Williams %R curve, area, dots, or histogram which is above the upper limit (-20) must cross the limit rapidly downwards.

Step 3 – Entry.

Enter a buy position following a confirmed bullish signal and a sell position following a confirmed bearish signal.

Step 4 – Exit.

Exit the buy position once the Williams %R curve, area, dots, or histogram dips below -50 from above.

On the other hand, exit the sell position if the Williams %R curve, area, dots, or histogram rises above -50 from below.

Alternatively, exit the buy position once the price crosses to begin trading below the EMA.

Exit the sell position once the price crosses over to begin trading above the EMA.

  1. The Williams %R Divergence Trading Strategy.

Williams %R divergence occurs where the Williams %R does not directly reflect what is happening on the price. 

Meaning, where the price is making lower lows, the Williams %R is making higher lows.

Similarly, where the price is making higher highs, the Williams %R is making lower highs.

Step 1 – Signal.

The first step involves looking for a trading signal. There are two types of Williams %R divergences and such are like the two expected outcomes of a trading signal – bullish and bearish.

The signals are as follows:

Bullish Williams %R divergence

  • Bullish Williams %R divergence – in a bullish Williams %R divergence, prices make lower lows as the Williams %R makes higher lows whose farthest end reads above the -50 level.

That means that the price is in a downtrend but the fact that the Williams %R is making higher lows which read above the mid-level means that the downward momentum is slowing and chances are that an upward trend reversal is coming up.

  • Bearish Williams %R divergence – in a bearish Williams %R divergence, prices make higher highs as the Williams %R makes lower highs whose farthest end reads below the -50 level.

That means that the price is in an uptrend but the fact that the Williams %R is making lower highs which read below the mid-level means that the upward momentum is slowing and chances are that a downward trend reversal is coming up.

Bearish Williams %R divergence

Step 2 – Confirmation.

A Williams %R divergence only means a slowing of price momentum either upwards or downwards.

As such, it may not necessarily translate into a trend reversal.

That is why you need to confirm the bullish or bearish divergence signal you get from step 1.

Here is how to confirm:

  • Bullish signal confirmation – the price is making lower lows as the William%R makes higher lows.

Draw a trend line joining the lows of the price which must be sloping downwards.

Identify the corresponding highs of the section on which you have drawn the trend line joining the lows and draw another trend line joining those highs, which must also be sloping downwards.

For confirmation that the bullish divergence will cause an upward reversal, the price must break the trend line joining the highs upwards.

  • Bearish signal confirmation – the price is making higher highs as the William%R makes lower highs.

Draw a trend line joining the highs of the price which must be sloping upwards.

Identify the corresponding lows of the section on which you have drawn the trend line joining the highs and draw another trend line joining those lows, which must also be sloping upwards.

For confirmation that the bearish divergence will cause a downward reversal, the price must break the trend line joining the lows downwards.

Step 3 – Entry.

Enter a buy position following a confirmed bullish Williams %R divergence signal.

On the flip side, enter a sell position following a confirmed bearish Williams %R divergence signal.

Step 4 – Exit.

Exit the buy position once the Williams %R curve, area, dots, or histogram dips below -50 from above.

On the other hand, exit the sell position if the Williams %R curve, area, dots, or histogram rises above -50 from below.

  1. Williams %R with Support and Resistance.

This strategy is based on the two core concepts of price action called support and resistance as well as the Williams %R indicator.

If you wonder what price action and support and resistance concepts are, then keep following for the next few paragraphs.

Price Action.

Price action is basically how the price behaves. If a trader uses price action to trade, they simply observe the highs and lows of the price and obey what the price is saying about itself without the influence of any indicator, oscillator, or technical tools.

Price action bears several concepts such as support levels, resistance levels, trend breakouts, and many more concepts.

The concepts we shall focus on in this strategy are support and resistance as far as price action is concerned.

Support and Resistance.

Support is a market price level that indicates a strong buy pressure.

It hints at a surplus of buyers and so falling prices, almost always, seem to reverse upwards once they reach such price level or zone.

Resistance, on the other hand, is a market price level that indicates strong selling pressure.

It points to a surplus of sellers and so rising prices, almost always, seem to reverse downwards once they reach such price level or zone.

The Strategy.

Now that support and resistance are not strange terms, how are they incorporated in a strategy together with the Williams %R to make trading profitable?

Follow closely…

The concepts of support and resistance will be the primary tool.

The signal obtained from support or resistance will then be confirmed using the Williams %R.

Step 1 – Signal.

Here is how to obtain bullish and bearish signal using support or resistance:

  • Bullish support signal – establish a zone of strong buy pressure, where falling prices, almost always, seem to reverse upwards once they reach that zone.

That will be the support zone and a bullish signal.

Note that the support may have either a horizontal or diagonal layout.

  • Bearish resistance signal – establish a zone of strong sell pressure, where rising prices, almost always, seem to reverse downwards once they reach that zone.

That will be the resistance zone and a bearish signal.

Note also that the resistance may have either a horizontal or a diagonal layout.

Williams %R with Support and Resistance.

Step 2 – Confirmation.

Support and resistance only, may not be sufficient to draw conclusions from.

For that reason, you need to confirm the signal using the Williams %R.

Here is how to go about the confirmation:

  • Bullish signal confirmation – the Williams %R curve, area, dots, or histogram which is below the lower limit (-80) must cross the limit rapidly upwards.

Alternatively, the Williams %R curve, area, dots, or histogram must cross from below to above the -50 level.

  • Bearish signal confirmation – the Williams %R curve, area, dots, or histogram which is above the upper limit (-20) must cross the limit rapidly downwards.

Alternatively, the Williams %R curve, area, dots or histogram must cross from above to below the -50 level.

Step 3 – Entry.

Enter a buy position following a confirmed bullish signal and a sell position following a confirmed bearish signal.

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Step 4 – Exit.

Exit the buy position once the Williams %R curve, area, dots, or histogram dips below -50 from above.

On the other hand, exit the sell position if the Williams %R curve, area, dots, or histogram rises above -50 from below.

  1. The Williams %R Trend Riding Strategy.

This strategy utilizes an ongoing trend in conjunction with the Williams %R as a profitable trading strategy.

So what exactly is a trend, because seemingly, it is the only term which we may not have adequately handled in the above discussions?

Pay keen attention as we explain below.

Market Trend.

A market trend is a sustained movement of the market price in a particular direction.

A trending market is one whose price shows sustained momentum towards a particular direction.

What do I mean by that?

If the price shows sustained momentum upwards, then the market is trending upwards. However, if the price shows sustained momentum downwards, the market is trending downwards.

In some instances, a market trend may actually not be trending in any particular direction.

In such cases, the market moves up and down in almost equal swing highs and swing lows, making it hard to determine the direction of the trend.

If this happens, we say that the market is trending sideways.

Trends may also be categorized as weak, healthy, or strong, depending on the strength which they portray as the price moves up or down.

Usually, moving averages are used to classify trends in terms of strength as follows:

  • Weak uptrend – the market is characterized by steep retracements, which usually go below MA 50.
  • Weak downtrend – the market is characterized by steep retracements, which usually go above MA 50.
  • Healthy uptrend – markets are characterized by retracements that never go below MA 50.
  • Healthy downtrend – markets are characterized by retracements that never go above MA 50.
  • Strong uptrend – markets are characterized by occasional retracements which rarely go below MA 20.
  • Strong downtrend – markets are characterized by occasional retracements which rarely go above MA 20.

The Strategy.

We have learned what market trends are, and the various categories of trend strength.

For this strategy, we aim at riding on a trend that has the potential to be sustained for long enough, so healthy and strong trends only, will do.

A healthy trend has a very high probability of graduating into a strong one as it grows.

The primary tool for this strategy will be the market trend.

Signals obtained using the market trend will then be confirmed using the Williams %R indicator.

Step 1 – Signal.

There are so many bullish and bearish signals which the market trend can give.

However, we cannot just pick every signal because not all of them work.

Here are the bullish and bearish market trend signal specifications for this strategy:

  • Bullish trend signal – on a healthy or strong uptrend, the price must break above the price level of the previous swing high.
  • Bearish trend signal – on a healthy or strong downtrend, the price must break below the price level of the previous swing low.

The Williams %R Trend Riding Strategy.

Step 2 – Confirmation.

Did you just obtain a bullish or bearish trend signal as specified above?

Do not get too excited to enter any trades before you subject that signal to a test using the Williams %R indicator.

Here is how to confirm the signals:

  • Bullish signal confirmation – the Williams %R curve, area, dots or histogram must cross from below to above the -50 level.

Alternatively, the Williams %R curve, area, dots or histogram which is below the lower limit (-80) must cross the limit rapidly upwards.

  • Bearish signal confirmation – the Williams %R curve, area, dots or histogram must cross from above to below the -50 level.

Alternatively, the Williams %R curve, area, dots or histogram which is above the upper limit (-20) must cross the limit rapidly downwards.

Step 3 – Entry.

Enter a buy position following a confirmed bullish signal and a sell position following a confirmed bearish signal.

Step 4 – Exit.

Exit the buy position once the Williams %R curve, area, dots, or histogram dips below -50 from above.

On the other hand, exit the sell position if the Williams %R curve, area, dots or histogram rises above -50 from below.


*Risk warning:

The information provided does not constitute a recommendation to carry out transactions. When using this information, you are solely responsible for your decisions and assume all risks associated with the financial result of such transactions.
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