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  • Williams %R Indicator

Williams %R Indicator

  • Posted by Abhilash Bandari
  • Date December 19, 2020
  • Williams %R is a technical indicator used to analyse the stock market. 
  • It is a momentum indicator used by traders to measure where the stock is overbought or oversold, thereby identifying the potential entry and exit points.
  • Williams %R takes the closing price and the high-low range of a period as the inputs.

Formulae used to measure Williams %R:

  1. Williams %R = (Highest High – Close) / (Highest High – Lowest Low)

Where, highest high and lowest low are the highest and the lowest prices in the last 14 periods.

This is the 1 day chart of United Breweries (BSE) around Nov, 2019 to Aug, 2020

  • The indicator typically ranges between 0 and -100.
  • If the value lies between 0 and -20, it indicates that the stock is overbought and if the value lies between -80 and -100, it indicates that the stock is oversold.
  • If the indicator value is below -80 during an upward trend, traders should wait until the value reaches -80. At that point, traders can enter the trade and initiate their long positions.
  • Similarly, if the indicator value is above -20 during a downward trend, traders should wait until the value reaches -20. At that point, traders can enter the trade and initiate their short positions.
  • Traders can also look at the momentum breaks using the indicator. During a strong upward trend, the value frequently crosses the -20 line.
  • But, if the indicator falls below -20 and is unable to reach -20 again without falling, then it signals a trend reversal and a bearish rally is seen thereafter.
  • Similarly, during a strong downward trend, the value frequently crosses the -80 line. But, if the indicator rises above -80 and is unable to reach -80 again without rising, then it signals a trend reversal and a bullish rally is seen thereafter.
  • The main disadvantage of Williams %R indicator is that the overbought and oversold signals do not always indicate a trend reversal. In fact, they help indicate a strong trend.
  • Moreover, the indicator is calculated using the historic values and it does not predict the future price trend. Also the number of periods chosen differs from trader to trader. If a trader choses many periods, the lag can increase, leading to false results.
  • Inexperienced traders may take the false results and lead to losses. Hence, the indicator should be used with few other indicators to better analyse the market.
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Abhilash Bandari

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Bajaj Electricals Limited is engaged in engineering and projects; power distribution, illumination and consumer durables businesses.

It has a range of domestic and kitchen appliances comprising water heaters, room heaters, coolers, irons, mixers, induction cookers, toasters, kettles, microwave, rice cookers, gas stoves, non-electrical kitchen aids and pressure cookers.

It offers ceiling, table, pedestal, wall, fresh air and industrial fans, and lighting solutions, such as light sources, light emitting diode-based lighting products, domestic luminaires, torches and lanterns.

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The Company's business segments consist of

  1. Lighting;
  2. Consumer Durables;
  3. Engineering & Projects,

The Lighting segment includes lamps, tubes and luminaries.

The Consumer Durables segment includes appliances and fans.

The Engineering & Projects segment includes transmission line towers, telecommunications towers, highmast, poles and special projects.

The Others segment includes diecasting and wind energy.

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