Trader's Toolbox: Williams %R

MarketClub is known for our "Trade Triangle" technology. However, if you have used other technical analysis indicators previously, you can use a combination of the studies and other techniques in conjunction with the "Trade Triangles" to further confirm trends.

Williams' %R oscillator, attributed to Larry Williams, is a variation of the stochastics indicator previously discussed. Because the two oscillators are essentially the same, only minor modifications to the formula are required. The formula for calculating %R is: %R = Hn – C / Hn – Ln where Hn = highest high of the period, C = Close of the current period and Ln = lowest low of the period.

The %R oscillator differs from the %K formula in the stochastics indicator because the outcome of each formula is inverse to the other. In other words, %K compares the close with the lowest low, whereas %R compares the close with the highest high. Similar to other oscillators, %R is plotted with horizontal zones of 20% and 80%. When the indicator has a reading of -80% or below it signifies an oversold condition. Similarly, a reading of -20% or above signals an overbought condition.


You can learn more about the Williams %R and Larry Williams by visiting INO TV.

Baseline for Active Investing

Today's author is Jackie Ann Patterson, the editor of BackTesting Report. Previously Jackie Ann showed us how to pick up on a potential trend change as well as how to recognize a mature trend using the MACD indicator. Today she has returned to the Trader's Blog to share a method for testing your trading strategy.

One of the ways that traders use to determine the success of a potential strategy is to use a baseline. A baseline is a benchmark or a standard for comparison. For example, some investors will use the gain/loss of the S&P 500 as a baseline of market performance. That may be useful for investing long-term in large-caps, but less applicable to active investing and shorter-term trading. This article shows you a different method of forming baselines and the win rate results for two types of stock market participants. Continue reading "Baseline for Active Investing"