In trading forex, PAMM trader or PAMM manager has the freedom to determine what indicator they want to use to analyze the market movement. One of famous indicator that is broadly used by traders is William Percent Range (%R). This is an oscillator indicator that is designed to measure market saturation and therefore to predict the possible reversal point. This indicator is also able to measure the strength of the current trend and determining particular trading strategy in the future.
William Percent Range is introduced by Larry William and is similar with Stochastic. The difference is that William %R is a single line fluctuating on a reverse scale from -100 (minus 100) until 0 (zero). While Stochastic fluctuates on a scale from 0 (zero) until 100 (a hundred). The William %R line usually climbs and creates the top before going down and reverses.
Like Stochastic, William %R indicator also identifies two extreme areas which are: overbought and oversold. If the indicator goes up at above -20, it’s called overbought. While if the indicator goes down below -80, it’s called oversold. When the indicator is moving out of the extreme areas, it could be a signal of a possible reversal point. In trading activity, a PAMM trader or PAMM manager can use this indicator in combining with other tools which show entry point signal or it could be used on its own right, in the convergence strategy. But please remember not to place a long profit target.
Traders could have possible sell opportunity when the indicator is crossing the overbought boundary from above. When it’s crossing the oversold boundary from below, it could be a signal of possible buy opportunity. The trading rules of the %R is simply buying in the oversold and selling in the overbought.
The values of the %R= -20 and %R= -80 are usually used to predict the future movement. Generally known, the highest value is the resistance point while the lowest value is the supporting point. At these points, the lines will possibly reverse either rise or fall. To get a maximum result, it is very recommended to combine this indicator with another tool which is able to give optimal entry-exit strategy. Identifying current market condition is also a must, before you make transactions. Remember not to act improperly just because of possible signals came from this indicator, without a deep consideration.
Happy trading using PAMM Investments system !
Don’t forget to read this important article for PAMM trader
1. How to become a PAMM Trader
2. Understanding your Forex Trader Level as PAMM Trader