Positioning a stock at the right time is among the most challenging and confusing things for a new stock market trader. If you step into the world of stocks intending to achieve short-term goals, you must understand the perfect entry and exit points. It can help you improve your chances of making profits in the stock market.
Therefore, you must perform a comprehensive technical analysis. This is where William R. Indicator comes into the picture. Read on to learn more about it.
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The William R. Indicator or William Percentage Range helps the stock market traders identify the entry and exit points. It contains a range from 0 to 100 that signifies the stock situation to help the traders understand whether they are oversold or overbought.
When the range stays between -20 and 0, it indicates that the stock is overbought. On the other hand, when the range is from -80 to 0, it means that the stock price is oversold. It helps predict price movements and future trends to alert the trader about significant profits and losses.
Calculating the William R. Indicator is quite easy. First, you must set 14 periods of look back where you must evaluate each low and high. Then, in the 14th period, consider noting the lowest price, highest price, and recent prices. However, here is the formula:
William R. = Highest High Price–Closest price / Highest High Price–Lowest Low price
Here, the highest price mainly indicates the highest stock prices during the taken period. Furthermore, the lowest price means the lowest stock price during the taken period, while the closest price signifies the current stock market closing price.
Traders must go through the following steps to trade safely with the William R. Indicator.
Step 1: Select a reliable trading platform like Motilal Oswal
Step 2: Create or log into your personal stock account and select the William R. Indicator
Step 3: Now, decide whether you wish to go with short or long
Step 4: Think about the risks and then come to a conclusion to understand how to handle the risks
Step 5: Open and keep track of your trades
The William R. Indicator can be a great way to understand a specific stock before investing if used properly. However, you must keep a few things in mind, like an oversold or overbought signal does not always necessarily indicate that the overall market trend will reverse. Remember, the William R. indicator often becomes overly responsive, it may give you false signals that you must be aware of.
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