Glossary term
Williams %R
Williams %R is a momentum oscillator that compares the latest close with the high-low range over a chosen lookback period.
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What Is Williams %R?
Williams %R, sometimes called Williams Percent Range, is a technical momentum oscillator developed by Larry Williams. It compares the latest closing price with the high-low range over a chosen lookback period, commonly 14 periods. The indicator ranges from 0 to -100.
Williams %R is often used to identify whether a security is closing near the top or bottom of its recent range. Readings near 0 suggest the close is near the high of the lookback range. Readings near -100 suggest the close is near the low of the range.
Key Takeaways
- Williams %R measures where the latest close sits within a recent high-low range.
- The common scale runs from 0 to -100.
- Traditional overbought readings are above -20; traditional oversold readings are below -80.
- The indicator is closely related to the fast stochastic oscillator but scaled differently.
- It can produce false signals in trending or choppy markets.
Formula
The standard formula is:
The highest high and lowest low are measured over the lookback period. A 14-day Williams %R uses the highest high, lowest low, and latest close over the most recent 14 trading days.
If the 14-day high is $110, the 14-day low is $100, and the latest close is $108, Williams %R is -20. The close is near the top of the recent range.
How Traders Read It
Traditional interpretation treats readings above -20 as overbought and readings below -80 as oversold. Those labels do not mean a reversal must happen. In a strong uptrend, a security can stay near the top of its range for a long time. In a strong downtrend, it can stay near the bottom.
Some traders use Williams %R as a confirmation tool rather than a standalone signal. A move back above -80 may suggest improving momentum after an oversold condition. A move back below -20 may suggest momentum weakening after an overbought condition. Context matters.
Where It Can Mislead
Williams %R is range-based. It can whipsaw when prices move sideways or when breakouts fail. It can also make strong trends look overextended too early. A high or low reading is a condition, not an instruction.
Investors should avoid using the indicator as if it predicts fundamental value. It says where price is relative to a recent range. It does not measure earnings quality, valuation, balance sheet strength, or macro risk.
The Bottom Line
Williams %R is a momentum oscillator that shows whether a security is closing near the high or low of its recent range. It can help frame short-term momentum, but it works best with trend, volume, risk controls, and fundamental context rather than as a standalone trading system.