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William %R is a powerful tool for trading on momentum and assist trader in choosing their best entry signal to open position. Williams %R, also known as the Williams Percent Range, is a type of momentum indicator that moves between 0 and -100 and measures overbought and oversold price levels in the market. The Williams %R may be used to find both entry and exit situations in the market. The indicator is very similar to the Stochastic oscillator and is used in the same way.
Chart Setup
As for this trading strategy, we will be using the following two indicators. The first one is the William Percent Range Indicator as our signal provider, and the second one is the Bollinger Bands for our entry filter, and it will also act as the exit signal provider.
This strategy is pretty flexible. You can choose from 15-Minutes timeframe to D1 timeframe for trading with this strategy. We will use the H1 timeframe for trading this easy, but robust strategy. Below are the settings we are going to use.
Input for William Percent Range Indicator parameters
- Period: 14
- Style: Black
- Overbought level: -20
- Oversold level: -80
Input for Bollinger Bands
- Period: 20
- Deviation: 3
- Shift: 0
- Applied to: Close
Buy Trading Signal
As you can see in the picture above, proceed to buy only when all of the following conditions below occurred:
Entry signal
- On the previous candle bar, the William Percent Range must be lower than the oversold level (-80).
- The previous candle bar’s low must be below the lower Bollinger Bands.
- The current candle bar must close higher than its open price.
Exit signal
- The previous candle bar’s high must be above the upper Bollinger Bands line.
- The current candle bar must close lower than its open price.
- You can use the previous candle bar’s low as your stop-loss level when executing the buy entry signal.
Sell Trading Signal
As you can see in the picture above, proceed to sell only when all of the following conditions below occurred:
Entry signal
- On the previous candle bar, the William Percent Range must be higher than the overbought level (-20).
- The previous candle bar’s high must be above the upper Bollinger Bands.
- The current candle bar must close lower than its open price.
Exit signal
- The previous candle bar’s low must be below the lower Bollinger Bands line.
- The current candle bar must close higher than its open price.
- You can use the previous candle bar’s high as your stop-loss level when executing the sell entry signal.
