Williams PercentR

Discussion in 'Technical Analysis' started by Marx, Mar 4, 2010.

  1. Marx


    I was just reading the article in the March issue of Futures mag about the Williams %R indicator. The article explains using this indicator for ETFs, but I was wondering if anyone has had success using this indicator for commodity futures.
  2. It is as useless as most other indicators. You are not going to get rich trying out magazine articles. People do not give away real edges for free. At best, you can learn some concepts. You still must learn how to trade, and that takes a long time and a lot of dedication. And stay away from the ads at the back of those mags!!!!
  3. You are correct that sucessful trading takes a long time and a lot of dedication. Also, people are not going to give away their edges in magazine articles. I mean, how many sucessful traders can REALLY put their 'edge' into words: trading is as much intuition as mechanics.

    However, I do not agree that Williams % R or other indicators are 'worthless': you simply have to learn how to use them. I use the RSI. It certainly doesn't forecast price but I assure you that I don't jump in with both feet when it gets Overbought. An extreme condition in the RSI at least tells me a change in trend or a consolidation is close at hand.

    TraderZones: do you really trade without ANY indicators at all ?
  4. Whether you think the indicator is worthwhile or not (and I'm inclined to go with the latter), Larry Williams essentially took George Lane's stochastic indicator, turned it upside down and named it after himself. A true pioneer.
  5. Indicators are not so useless, if you do the opposite of what they were intended to indicate.
  6. Its not a bad indicator except somehow hard to pinpoint on smaller timeframes
  7. Larry Williams uses it very successfully when trading futures. It works the same as any oscillator, including stochastics and RSI. I find that %R is more sensitive in that it gives more frequent signals than stochastics and it seems to sometimes give premature signals. You can compare them side by side on the attached chart.

    Buying in an uptrend when stochastic or %R is oversold and selling in a downtrend when they are overbought is a very basic trend following approach that is the basis for many successful systems. A lot of experienced traders on ET simply like to watch price action to identify pullbacks in a trend, but indicators can make it easier to identify when you are new to trading.

    Larry's significant other, Louise Stapleton, states that she uses the indicator I have on the chart (PercentR with momentum/PercentR(4)) to successfully day trade currencies.
  8. Marx


    Thanks, DrPepper. I did a little backtesting with it to see how it might have worked and it appears that if used in combination with the MACD to confirm a buy signal it could be helpful. I also look at RSI and for detrended overbought/oversold conditions as well. There is certainly a lot to learn about this game.
  9. This is intelligent post, think about it. Of course price is alfa and omega but if you ignore "over" conditions than sooner or later it will kick your teeth. Moreover, they exists patterns on indicators, same way as price pattern and some quite reliable as well. Although trading solely based on indicators is not possible after my opinion I will be not able trade without them. Price does not forecast future as well, it is all just PROBABILITY GAME.

  10. And this is the problem, it is pretty much guesswork. Try this; take 5 years worth of this indicator, for at least 20-30 different instruments, and see how all "signals" from this indicator performed - i.e. how they did on a REALLY LARGE sample, as compared to these same markets during the same time frame.

    You will likely find, it does little more than random.
    #10     Mar 5, 2010