What is the Williams %R Indicator?
Williams %R is a momentum oscillator that shows you where the current close sits inside the recent high-low range, scaled from 0 to -100. Larry Williams built it back in the day. It plots in a separate panel below price — you'll never see it on the chart itself.
How to read it:
- Near 0: price is closing near the top of the range. Buyers are in control.
- Near -100: price is closing near the bottom of the range. Sellers are in control.
- -20 line: the overbought zone.
- -80 line: the oversold zone.
- Default lookback: 14 periods.
How is the Williams %R Indicator Calculated?
The formula compares the latest close to the highest high and lowest low across a lookback window — 14 periods by default.
%R = [(Highest High − Close) / (Highest High − Lowest Low)] × -100
The -100 multiplier flips the scale so the reading always stays between 0 and -100. It measures how far off the recent high price is, in percentage terms, then inverts the number so it reads negative.
You don't need to calculate this by hand. Every platform plots it for you. Knowing the formula matters because it tells you what the indicator reacts to: price relative to its recent range. Volume and order flow don't factor in.
How to Use the Williams %R Indicator in Trading?
Williams %R works as a timing tool inside an existing setup. Anyone telling you to "go long every time %R crosses -80" without checking context is selling a course.
Three setups work consistently:
- Oversold exit (long trigger): %R drops below -80, then crosses back above -80. Sellers stopped pressing price into the lows. The cross back up is the signal.
- Overbought exit (short trigger): %R climbs above -20, then crosses back below -20. Buyers stopped lifting price into the highs.
- Divergence (momentum warning): price prints a new high or low and %R refuses to confirm. The push is running out of gas. Wait for a break of price structure before acting — divergence alone gets traders chopped up.
Use a trend filter. In a strong uptrend, %R will sit pinned above -20 for days. In a downtrend, it stays glued below -80. Buying every -80 cross in a downtrend is how accounts bleed out.
Take longs above a rising moving average. Take shorts below a falling one. Then let %R time the entry inside that bias.
Place your stop beyond the swing high or low that invalidates the trade. Price structure defines the stop.