What is Williams %R? Definition, Formula, and Example
Williams %R is a momentum oscillator that measures the position of the current close relative to the highest high over a 14-period lookback, ranging from 0 (overbought) to -100 (oversold).
Definition
Williams %R, often written %R, is a bounded momentum oscillator developed by Larry Williams in 1973. It measures where the current close sits within the trading range of the past N periods, expressed as a negative percentage from 0 (close at the period high) to -100 (close at the period low). Default lookback is 14 periods. Readings above -20 indicate overbought conditions; readings below -80 indicate oversold conditions. The oscillator is mathematically equivalent to an inverted, unsmoothed stochastic %K.
Williams %R Formula
The calculation is:
%R = ((Highest High over N − Current Close) / (Highest High over N − Lowest Low over N)) × −100
Where:
- Highest High over N = the highest high in the lookback window (default 14)
- Lowest Low over N = the lowest low in the lookback window
- Current Close = the most recent closing price
The output is bounded between 0 and -100. A close at the period high produces 0; a close at the period low produces -100; a close at the midpoint produces -50.
Worked Example
NVDA on 2026-05-07:
- 14-day Highest High: $1,025.40
- 14-day Lowest Low: $948.20
- Current Close: $1,012.80
Calculation:
%R = ((1,025.40 − 1,012.80) / (1,025.40 − 948.20)) × −100
%R = (12.60 / 77.20) × −100
%R = −16.32
A reading of −16 places NVDA above the −20 overbought threshold — the close is in the upper 20% of its 14-day range. In a strong uptrend this is consistent with continuation; in a range-bound market this signals an unfavorable risk-reward for new long entries.
When Traders Use Williams %R
- Mean-reversion entries: Buy at <−80 and sell at >−20 in range-bound markets. The classic configuration. Combine with Bollinger Bands to confirm range-bound regime.
- Divergence: Price prints a higher high while %R fails to exceed its prior reading above −20. This bearish divergence signals momentum exhaustion. Symmetric setup applies on the long side.
- Trend-following filter: In strong uptrends, %R spends most of its time above −50; readings below −50 signal trend weakening rather than oversold buy conditions. Read %R alongside the underlying trend, not in isolation.
- Multi-timeframe confirmation: Pairing daily %R with weekly trend direction filters most false signals. Many systematic mean-reversion strategies require %R extremes only when the long-term trend confirms the trade direction.
- Pair with RSI and the stochastic oscillator: Two-of-three confirmation reduces false signals.
Limitations and Common Misconceptions
- Overbought is not a sell signal: In strong trends, %R stays pinned above −20 for weeks. Selling every overbought print in NVDA during 2024 produced a string of losses.
- Redundant with stochastic %K: Williams %R is mathematically identical to (Stoch %K − 100). If you already use Stoch, %R adds no information.
- Lookback sensitivity: A 5-period %R produces dozens of false signals per month. A 28-period %R lags too much for active timeframes. The 14-period default is a compromise — there is no universally optimal value.
- Useless during regime shifts: When volatility expands and price breaks the prior 14-day range, the oscillator pins at −100 or 0 and provides no actionable signal until the new range stabilizes.
- No volume input: %R is a price-only indicator. Volume-aware oscillators like the money flow index catch divergences %R misses.