Larry Williams' business approach
Larry Williams' trading strategy incorporates a comprehensive range of technical analysis tools, fundamental factors, and market sentiment analysis. Williams places considerable emphasis on understanding market cycles according to which he timed his trades. He uses a variety of indicators to identify potential entry and exit points, including moving averages, trend lines, and volume analysis.
In addition, he also incorporates fundamental analysis to assess the impact of economic news and events on market movements. Taking inspiration from Lary Williams' trading strategy may be easier than you expect - in fact, Williams is the author of several indicators that help traders identify the ideal entry point. We take a closer look at the Williams %R indicator.
The uniqueness of the Williams %R indicator
Williams consolidated his position as a legend by creating several indicators of his own, which are still widely used by traders today. Probably the most famous and, according to Williams, the most successful one is called Williams %R.
This oscillator measures asset movements by comparing the closing price to a range of highs and lows over a period of time, very often 14 days. The indicator oscillates between values of 0 and -100, with values above -20 indicating overbought conditions and values below -80 oversold conditions.
Williams' %R indicator, however, is far from the only one that brought this legend into the world. His other indicators include the Ultimate Oscillator, the WillCo Index, the Williams Sentiment Index, and the Williams Money Flow Index.
But let's get back to the Williams %R, which can give traders valuable information about potential trend reversals and can be used to generate buy and sell signals. However, a technical indicator alone is not enough to enter a position; traditionally, it is advisable to supplement it with at least support and resistance levels, or another technical indicator such as moving averages. Indeed, to use the Williams %R indicator effectively, traders usually look for divergences, and confirmations from other technical indicators and note outliers in overbought or oversold areas.
USD/JPY pair on D1 chart in cTrader platform with Williams %R indicator (14)
Although Larry Williams traded primarily commodities (which like to trend), his Williams %R oscillator can be used in virtually all markets. The chart above shows the evolution of the USD/JPY currency pair on the D1 chart. The chart also shows support (black) and resistance (purple) levels. At the bottom of the chart are the values of the Williams %R oscillation indicator with a 14-day period. The oscillator values between 0 and -20 show us overbought levels and between -80 and -100 show us oversold levels. Complementing the chart with correctly drawn supports and resistances is key to identifying trade entry.,
Williams %R indicator is part of our MetaTrader 4 and cTrader trading platforms
While oversold and overbought levels occur regularly on the chart, confirmation by touching or briefly breaking (and pulling back) support and resistance has occurred in a total of five cases. On three occasions, a touch of resistance occurred along with confirmation of the oversold level using Williams %R. These cases are shown by the green rectangle. In two cases, support was touched while confirming the overbought level using Williams %R. These cases are shown by the red rectangle. However, for successful trading, one must also keep an eye on the fundamentals, which can significantly affect any asset.