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The PercentR strategy is based on Larry Williams’ %R indicator. It is a fast-moving oscillator that measures the relationship between the current Close and the High/Low range over a specific period.
How Logic Works
The indicator scales from 0 to -100. It is essentially an “inverted” oscillator where values near 0 suggest the price is at the top of its range.
- Long Entry: Triggered when the PercentR line crosses above the “Overbought” line (typically -80), suggesting the market is recovering from a deep dip.
- Short Entry: Triggered when the PercentR line crosses below the “Oversold” line (typically -20), suggesting the market is falling from a peak.
Key Customizable Inputs
- Length (Default: 14): The look-back period for the calculation.
- OverBought/OverSold: The threshold levels used to trigger signals.
Strategic Considerations
- Anticipating Turns: Because %R is highly sensitive, it often reaches “extreme” levels before the actual price reversal occurs.
- Trend Filtering: In a strong trend, %R can stay pinned at an extreme level for a long time. It is often most effective when used to find entries into the “pullbacks” of a larger trend.
