Williams% R

The Williams percentage range , briefly Williams% R , or only % R , is an indicator of technical analysis in equities trading. This index was developed by Larry R. Williams in 1966 to indicate overbought and oversold situations.

calculation

The Williams% R is obtained using the formula

${\displaystyle \%R={\frac {H_{n}-C_{aktuell}}{H_{n}-L_{n}}}\cdot (-100)}$

calculated using the current closing price , the highest price of the last periods, and the lowest price of the last periods. We recommend using the values ​​of the last 14 periods (e.g. days, weeks, months), but smaller time windows can also be selected. ${\displaystyle C_{aktuell}}$ ${\displaystyle H_{n}}$ ${\displaystyle n}$ ${\displaystyle L_{n}}$ ${\displaystyle n}$

The result is between 0 and −100. The proximity to 0 indicates that the markets are overbought (values ​​between 0 and −20). The turn of the signal down creates a sell signal. Values ​​between −80 and −100 indicate oversold situations. When the indicator turns up, a buy signal is generated.

application

The Williams Percent Range is one of the oscillators and is intended to indicate a corresponding U-turn in the trend in price development. It should be noted that reaching the “overbought” or “oversold” area does not indicate immediate action, as the price (of a share or another underlying ) can continue to move at this high or low for a long time. It is usually recommended to wait for the future prices to adjust before taking any action.

The shorter the application period for the Williams% R , the more volatile and consequently less meaningful the results.

The Williams% R is considered to be very flexible and can be used in all markets and with all time variants of the chart technique. In particular, sideways movements of prices can be analyzed well.

criticism

Due to the stochastic processes in the markets and the work of Louis Bachelier on this topic, the consideration of historical values ​​for forecasting future developments is very controversial and should be treated with caution.

The random walk hypothesis of Bachelier and deduced efficient-market hypothesis shows that even at low efficiency historical data on which the Williams% R have been fully processed exclusively relies, in the course and the time of publication no longer have any predictive value.

Although the market efficiency hypothesis has been criticized for several decades, mainly due to anomalies such as the January effect , most of these anomalies have disappeared again after they became known and something similar must also be taken into account with the Williams% R. The more market participants act on this indicator, the less suitable the effect becomes for a forecast.

Individual evidence

1. ^ Wolfgang Gerke: Gerke Börsen Lexikon . 1st edition. Gabler, Wiesbaden 2002, ISBN 978-3-322-82632-9 , pp. 868 ( online [accessed January 11, 2017]).
2. ↑ Williams Percent Range on aktien-portal.at
3. ↑ The efficiency thesis. In: Klaus Schredelseker: Fundamentals of finance. Oldenbourg Wissenschaftsverlag, Munich 2002, p. 471 ff.
4. ↑ Christian Salm, Jörg Siemkes: Persistence of calendar anomalies in the German stock market. (PDF; 108 kB) In: wiwi.uni-muenster.de. Archived from the original on December 2, 2012 ; accessed on July 27, 2018 .