Williams %R (WR)

What is Williams %R?

Williams %R, or Williams Percent Range, is a momentum indicator that measures overbought and oversold levels in the market. It compares the current price of a security to its price range over a specific period, usually 14 days. The indicator fluctuates between 0 and -100 with readings below -80 generally indicating oversold conditions, and readings above -20 indicating overbought conditions.

How does Williams %R work in a trading scenario?

In a trading scenario, traders use Williams %R to identify potential buy or sell signals. When the indicator falls below -80, it could suggest that the security is oversold and might be due for a price rebound. Conversely, when the indicator rises above -20, it could indicate that the security is overbought and might be due for a price decline. Traders also watch for divergences between Williams %R and the price of the security which might indicate a potential trend reversal.

Limitation of Williams %R

The main limitation of Williams %R is that it can produce false signals in a trending market. For instance, during a strong uptrend, the indicator might remain in overbought territory for an extended period, misleading traders into thinking a price decline is imminent when it's not.

The Information presented above is for education purposes only, which shall not be intended as and does not constitute an offer to sell or solicitation for an offer to buy any securities or financial instrument or any advice or recommendation with respect to such securities or other financial instruments or investments. When deciding about your investments, you should seek the advice of a professional financial adviser and carefully consider whether such investments are suitable for you in light of your own experience, financial position, and investment objectives.
In no event shall Sahm Capital Financial Company be liable for any damages, losses or liabilities including without limitation, direct or indirect, special, incidental, consequential damages, losses, or liabilities, in connection with your reliance on or use or inability to use the information presented above, even if you advise us of the possibility of such damages, losses or expenses.
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