Sunday, November 24, 2013
Types of Williams Indicators
Larry Williams created a large number of indicators the rationale behind which is explained in his various books and articles. With his celebrity status in the trading community, it was not long before brokers incorporated his ideas into their own software and trading packages, and today the Williams Percent Range indicator, for example, is a part of the standard technical charting toolbox of just about any broker.
Similar to the Stochastics indicator, Williams Percent Range Indicator is one of the most popular tools created by the famous trader. It is basically a volatile oscillator the signals of which are acted upon only if they last for a considerable period of time. Unlike the RSI, for example, one doesn't buy or sell at overbought/oversold levels, but awaits the consolidation of the price in these regions before any conclusion is reached.
The Williams Oscillator is widely available as part of most forex charting packages.
Larry Williams has developed many ways of measuring the accumulation/distribution phenomenon in the markets in light of volatility, open interest, volume, and many other factors. These indicators are not as common as the percent range indicator, but they are popular and highly regarded by traders.
The Ultimate oscillator was created for the purpose of reducing the effect of short-term large movements on the signals generated. The indicator measures accumulation/distribution in the market, instead of focusing on the price directly, and can also be configured to fluctuate in accordance with three different time cycles corresponding to 7, 14, and 28-period measurements.
The indicator is used on the basis of divergence/convergences, and a signal is confirmed with a trend break, which is a gap in the price indicating that the momentum of the price action has changed decisively. Positions are opened on the basis of highs or lows registered on the oscillator.
This is not so much as an indicator as it is a concept introduced by Larry Williams in one of his books. Used with simple bar charts, or in more complicated configurations, the Greatest Swing Value concept is used by swing and range traders for establishing trade patterns.
Blast Off Indicator
This indicator is not very common, since it is a proprietary tool, but Larry Williams will not hesitate to talk about it during his appearances in meetings or seminaries with other traders.
Needless to say, Williams indicators are very popular in the trading community. The trading record of the creator of these tools is enough in itself, for many people, to justify their use. Nonetheless, anyone who regards these tools as charmed items that will protect their users from error is likely to be disappointed in short order. As with any indicator, using the Williams indicators requires, above all, a reasonable degree of skepticism about their effectiveness. No indicator will eliminate the necessity of a diligent and focused approach to risk management. These tools are no exception.
In this group, the most popular ones are the Williams Percent Range indicator and the Ultimate Oscillator. Although we're going to examine both of them in greater detail in a separate article, we may note here that as trend indicators that are volatile themselves, and will generate good results only if the signals emitted by them are used with great conservatism. In other words, pick the most convincing, and long-lasting signals, as you'll have plenty of them to act upon in any case. It is possible to do very well with these great indicators when one treats risk sensibly and does not get carried away by his successes, or allow his failures to chop off a large chunk of his account by trading too much.