Williams percentage range

Forex indicators are quite simple and attractive ways to understand what is happening at the moment in the financial market. Of course, they can not predict all the variety of changes, but they can give a signal that you need to enter or exit the market. You don't need to be too trusting about the indicators, but why not take their opinion into account?
Today we will talk about a very simple but effective oscillator (a type of indicator that is designed to

understand what is happening during the flat period), which is called the “Williams Percentage range”.

Williams percentage range
The

task of the Williams percentage range is to determine the speed at which prices move. This indicator is quite old, it was invented back in 1973. It allows you to determine the closing price relative to the maximum and minimum values. The question is, why is this necessary? And to determine overbought and oversold.
For reference, overbought is the state of the market when the price of a currency has reached its maximum. The reason is that more and more traders are determined to sell the asset. Oversold is the opposite condition in which the price of the currency cannot be reduced further.
Why should a trader know this? The fact is that when we have reached the point of overbought, it is usually at this point there is a new trend. Maybe the price will hold for some time, but as a result, the quotes will still go in the opposite direction.
How is the Williams percentage range calculated?

There is one very simple formula (although you can't tell from the look of it) that calculates the Percentage range.

Williams percentage range

Let's analyze it in more detail. What does the high indicator mean? This is the maximum for a certain period of time. In the above formula is proposed to calculate the percentage range for the 14 periods. That is, for 14 days, 14 hours, and so on. How do I know if a period has started or ended?

Open the candlestick chart. We set a timeframe, for example, one day. In this case, one candle closes in 24 hours. That is, in fact, in parentheses we write the number of candles for which you need to determine the maximum. Similarly with the low variable. This is the lowest indicator for a certain number of candles.

And that means that the variable is Close? And this is the closing price of the last candle.
Why does the formula described above use exactly 14 periods? The fact is that this is the most convenient scheme for a trader.
The use of a range of Williams

How do I determine that it's time to enter the market using this indicator? There are several ways, and you can't write everything. We will give only one. First, we need to determine the main trend. This is where any strategy starts. To do this, wait until the indicator enters the overbought or oversold zone, and set the reverse trend. For example, in a downtrend, we wait until the market becomes oversold, and then we open a deal to buy and Vice versa.
Here is a simple scheme. In principle, this indicator shows almost no incorrect values. But it is worth knowing fundamental analysis to take into account the smallest nuances of the financial market.