Williams %R: Closing Position in a Range

Use the negative scale correctly

The formula is −100 × (highest high − current close) / (highest high − lowest low), using the selected observation window. Fidelity explains Williams %R and its range. A value near zero means the close is near the window's high; a value near −100 means it is near the low.

Because the scale is negative, −10 is a higher reading than −80. The negative sign does not mean the instrument has lost money, is below its previous close, or is necessarily trending downward. The reference points are the window's extremes rather than an account entry price.

Work through the range

Suppose the highest high in a hypothetical window is 120, the lowest low is 100 and the latest close is 115. The distance below the high is 5 and total range is 20. Williams %R is −100 × 5 / 20 = −25. Moving the close to 102 with unchanged extremes gives −90.

Now hold the close at 115 but allow an older low of 100 to leave the rolling window. If the remaining lowest low is 110 and the high stays 120, the reading becomes −50. The close did not change; the reference range did. A midpoint reading can arise because old observations disappear, not because price suddenly moved.

If high and low are both 115, the denominator is zero. No location inside a positive-width range can be computed. Software may preserve a previous reading, show a chosen neutral value or return missing data. A spreadsheet should disclose its choice instead of presenting an arbitrary number as a valid measurement.

Compare related oscillators carefully

With the same high, low, close and lookback, raw stochastic %K equals Williams %R plus 100. In the first example, −25 corresponds to %K of 75. Adding smoothing to the stochastic display or changing the source bars breaks that simple comparison. Two oscillators with similar-looking extremes are not automatically independent confirmations.

Conventional −20 and −80 regions describe closes near the high or low of the selected range. A market repeatedly closing near successive highs can remain near zero. Calling it overbought does not prove a top, and the label does not identify a suitable stop or an acceptable cash loss.

Make the next step measurable

Export the highs, lows and closes around a disputed reading. Check whether an old extreme left the window, whether a new extreme entered, and whether the most recent bar had finished. These checks often explain an apparent signal change more directly than adding another indicator.

Read the stochastic calculation and compare RSI's gain/loss method. If using the reading operationally, specify the threshold event and bar timing in a trading journal. An oscillator reports a relationship within selected historical observations; the order and exposure decisions remain separate.