PassiveEarning

Williams Percent Range - Definition and usage

Williams Percent Range - Definition and usage

I wanted to talk about the Williams Percent Range, in short Williams %R, indicator. It is a indicator when something is overbought or oversold. It can be used to determine when to enter or when to exit a market. That is when to buy stock or sell them. On the picture below you can see how the indicator moves from oversold (pink area) to overbought (gray area). But what does this mean for an investor? When the W%R is overbought (gray area) it is a good moment in time to sell the stock and vice versa, when the indicator exits the pink area or is pink then you should buy the stock.

I am using gray and pink just to illustrate how it looks in this image. But the William %R moves between 0 and -100, when it is above -20 (from -20 to 0) then the stock is overbought, when it is below -80 (from -800 to -100) then the stock is oversold. But oversold and overbought do not give 100% sure indication of trend reversal. They simply mean that the price has reached a high or a low. But when a price reaches a low it can mean that it is in an uptrend and that the price will increase and not go down. In order to have a better idea when to sell or buy, you should always use more indicators.

Below you can see what I did in the case of this stock. At “Point 1” I saw a good indicator that the market is going to turn, because the stock was oversold. I bought a $500 worth of stock, the stock jumped by 1.4%. At “Point 2” I sold my stocks and make $7 in a matter of 4 minutes. Then at “Point 3” I bought the stock because I though the trend is going to jump high, but it just jumped by %0.4, but this time I invested $507, so I earned an additional $2.028. Then my 30 minute slot for trading a day was gone, so I had to stop trading.

If you want to follow what I do, you can join eToro, my username is “igorjakovljevic”.

For now, I do all of my trading via eToro and you can read about that in here.

If you are interested in finding out more about investing, I can suggest this –> The Intelligent Investor.

Disclaimer: This is not financial advice. I am not a financial advisor. I am not affiliated with eToro. The intention of the post is just to share my experiences.