Once crossing below , you then wait for the bar to close to place a sell order. If you simply placed a sell stop order below the low of this bar, you would have entered the market when the bearish momentum was at its highest. Hence, you could have gotten away with placing a smaller stop-loss, which would, in turn, increase your risk to reward ratio on this particular trade.
This kind of divergence suggests a trend continuation. As you can see, after forming a bearish price action bar, the AMGN price shortly resumed the downtrend and you could have easily placed a sell stop below the bearish bar to capture this short swing. Here is the setup and you will love its simplicity. First look for the indicator to break to the upside, so the shading kicks in. Then wait to see if the indicator can stay below for 10 periods in a row.
If the stock is able to show this level of strength you can then use the first dip as a buying opportunity to jump on the primary trend. Ride the Williams As you can see in the above chart, once you are in the position, you can then ride the stock until the stochastics breaks on the way down. The hardest part of this strategy is not pulling the trigger too soon.
Like other momentum indicators, it has its flaws, as it can remain extremely overbought during an uptrend and vice-versa [4]. Instead, if you trade smartly by combining price action and use the indicator to confirm the momentum in the market, your chance of ending up with a profitable trade would increase tremendously. The default levels are listed under the Levels tab: and You can edit them if you want. When you are all done, click on OK to add the indicator to your chart.
This is it! Check below the chart, and you will see the indicator. Now you can use it to trade. How to use the Williams' Percent Range indicator while you trade You can use the Williams' Percent Range indicator to help you spot trend reversals.
But there is an important caveat regarding the timing of your entries. You might think the moment you see the line in the indicator crossing below , you should buy since conditions are oversold. Likewise, you might think that the instant the line crosses above , you should sell since conditions are overbought. But actually, you should wait for price to pass back into the "normal" range from the overbought or oversold area before you get into a trade.
When the market is trending upward, the indicator may rise above If it does, wait for it to fall again. When it crosses back below , that means to sell. When the market is trending downward, the indicator may drop below Wait for it to rise back above , and then buy. There are also a couple of ways you can use this indicator during a trend. When the market is trending upward, the indicator may repeatedly move above When that happens, the uptrend is strong. If, during a downtrend, the indicator repeatedly crosses below , the downtrend is strong.
Also: If the market repeatedly crosses above , and then fails to do so the next time it tries, upward momentum is decreasing. If the market is repeatedly crossing below , and then fails to do so the next time it tries, downward momentum is declining. So, if you determine that the trend is still strong, you could consider trading with the trend.
If you determine that the trend's momentum is decreasing, you could consider exiting and maybe even reversing your position. General tips for using the Williams' Percent Range indicator You have the basic idea now for how to use the Williams' Percent Range indicator. Below are a few things to keep in mind as you trade: Time entries with great care.
Consider a situation where price has been rising and you see it pass above You might think that if you immediately sell, you will get in on the beginning of a reversal early. But remember, it is possible for price to hover in the overbought range for some time.
It also can drop back into the normal range and rise repeatedly in the middle of an uptrend. That is why it is wise to wait until price drops down below if you want to sell. But even then, there are no guarantees. The indicator could pop right back up again while price continues to rise.
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The Keltner channel is a very versatile trading indicator that can be used in a myriad of ways. For our purposes here, we will use it as part of our entry signal and as a trailing stop. There will also be a trend component to this William percent range strategy. That is to say we will need a way to recognize whether the market is trending or is trading in a sideways, range bound manner.
For trend identification, we will be keeping it as simple as possible. Instead of relying on a trend based indicator, we will simply analyze the price action and decide whether the market is in a trending phase or a consolidation phase. If the market is identified as being in a trending phase, then will move forward with the trade evaluation process. Below are the conditions and trade management details for entering into a long position using the strategy. The oversold territory is defined as being between and Enter a long position on the candle following the close above the middle line of the Keltner channel.
The stoploss should be placed below the recent swing low preceding the long entry. The exit will occur when the price closes back below the middle line of the Keltner channel. Below are the conditions and trade management details for entering into a short position using the strategy. The overbought territory is defined as being between and 0.
Wait for price to close below the middle line of the Keltner channel. Enter a short position on the candle following the close below the middle line of the Keltner channel. The stoploss should be placed above the recent swing high preceding the short entry.
The exit will occur when the price closes back above the middle line of the Keltner channel. The three blue lines that overlay the price represents the Keltner channel bands. For this strategy, will be focusing on the middle line primarily. The Williams percent R oscillator is shown at the bottom pane below the price.
The lower dotted line shows the minimum threshold for the oversold reading. In order for us to consider a possible short trading opportunity here, we must confirm that the price action leading up to this overbought reading displays a bearish market trend. If you look at the price action leading up to this overbought reading, and the downward pointing blue arrow, we can clearly see that there was a downtrend in place.
And so, our trend filter has been met in this case. This too can be confirmed and is shown within the magnified area near the center of the chart. With these conditions now satisfied, we can prepare for a short trade in the Euro FX futures. The signal to go short would occur once the price closes back below the center line of the Keltner channel. We can see that there is a strong bearish candle that closed below this critical centerline.
As such, the sell entry would be entered at the market at the start of the following bar as shown by the blue arrow labeled, Sell. Now we will turn to the trade management process. The first thing that we will need to do once our sell order has been executed, is to put a hard stop in the market to protect ourselves in case of an adverse price move to the upside. The stop loss should be set at the swing high preceding the sell entry signal, as illustrated by the dashed black line above the entry.
Finally, we would want to monitor the price action closely, as it begins to move in our favor, which in this case is lower. As we can see immediately following the sell entry signal, the market began to selloff quite sharply which led to prices moving below the lower line of the Keltner channel.
The signal to exit would occur when prices move back above and close above the centerline of the Keltner channel. You can see where that occurred by referring to the blue arrow marked as, Target. The chart below shows the price action of this pair based on the four hour timeframe. If you glance at the lower portion of this chart, you will see where the Williams percent R oscillator triggers an overbought reading. Although Larry Williams initially calculated the indicator using periods, your charting package will likely use 14 periods.
Readings below represent oversold territory and readings above represent overbought. Now, this does not mean you should buy readings below and sell readings above During a strong uptrend, a stock can hover around Conversely, in a strong downtrend, a stock can stay in the territory.
Stochastic Oscillator While there are two variants of the Stochastic Oscillator, the formula below is for the Fast Stochastic Oscillator [3]. The one major difference is the stochastic oscillator gives you a trigger line which you can use to execute entries and exits. Three Trading Strategies Strategy 1 — Cross of Instead of using the indicator for simply identifying overbought and oversold market conditions, you can develop a trading plan around the line cross.
At this point, you can start to look for opportunities to trade the stock direction of the cross. Once crossing below , you then wait for the bar to close to place a sell order. If you simply placed a sell stop order below the low of this bar, you would have entered the market when the bearish momentum was at its highest. Hence, you could have gotten away with placing a smaller stop-loss, which would, in turn, increase your risk to reward ratio on this particular trade.
This kind of divergence suggests a trend continuation.
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Profitable Williams Percent Range Strategy - How to Use in Bollinger Bands Forex Scalping StrategyUnlike the Stochastic oscillator Williams Percent Range is a single line fluctuating on a reverse scale.
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