The Volatility Adjusted WPR (Williams Percent Range) Indicator is a modified version of the popular Williams Percent Range oscillator, incorporating a volatility adjustment to improve its sensitivity and responsiveness to market conditions. The indicator is designed to identify overbought and oversold conditions in the market, helping traders to time their entries and exits more effectively. In this article, we will discuss the definition, working, best settings, and how to trade using the Volatility Adjusted WPR Indicator for MT5.
The Volatility Adjusted WPR Indicator is a technical analysis tool that measures the level of the current price relative to the highest high and the lowest low over a specified period, adjusting the calculations for the current market volatility. The indicator helps traders identify potential trend reversals and overbought or oversold market conditions, providing valuable insights into market dynamics.
The Volatility Adjusted WPR Indicator is calculated using the following formula:
Adjusted WPR = 100 * (Highest High – Close) / (Highest High – Lowest Low) * Volatility Ratio
- Highest High is the highest price over a specified lookback period
- Close is the current closing price
- Lowest Low is the lowest price over the specified lookback period
- Volatility Ratio is the ratio of the current Average True Range (ATR) to the ATR of the specified lookback period
The Volatility Adjusted WPR Indicator is displayed as an oscillator on the chart, oscillating between -100 and 0. The -20 and -80 levels are typically used as overbought and oversold thresholds, respectively.
The default settings for the Volatility Adjusted WPR Indicator are as follows:
- Lookback Period: 14
- ATR Period: 14
These settings can be adjusted to suit the trader’s preferences and trading style. Increasing the lookback period will smooth the indicator and reduce its sensitivity to price movements, while decreasing the period will make the indicator more responsive to market changes. The same applies to the ATR period used for the volatility adjustment.
How to Trade with the Volatility Adjusted WPR Indicator
Overbought and Oversold Conditions
When the Volatility Adjusted WPR Indicator crosses above the -20 level, it signals an overbought condition, suggesting that the price may be due for a correction or reversal. Traders can look for sell opportunities or exit long positions during these periods.
Conversely, when the indicator crosses below the -80 level, it signals an oversold condition, indicating that the price may be due for a rebound or reversal. Traders can look for buy opportunities or exit short positions during these periods.
Traders can also use the Volatility Adjusted WPR Indicator to identify divergences between the price and the indicator, which may signal potential trend reversals. A bullish divergence occurs when the price forms lower lows, while the indicator forms higher lows, suggesting a potential upward trend reversal. A bearish divergence occurs when the price forms higher highs, while the indicator forms lower highs, indicating a potential downward trend reversal.
It is essential to use the Volatility Adjusted WPR Indicator in conjunction with other technical analysis tools and sound risk management practices to increase the probability of successful trades and minimize the risk of false signals.
The Volatility Adjusted WPR Indicator for MT5 is a valuable tool for traders looking to identify overbought and oversold market conditions and potential trend reversals. By incorporating the Volatility Adjusted WPR Indicator into your trading strategy, along with other technical analysis tools and risk management practices, you can improve your trading performance and capitalize on potential market opportunities. Download the Volatility Adjusted WPR Indicator for MT5 for free today and start identifying overbought and oversold conditions in your trading.Download indicator