The Ultimate Momentum Oscillator For Huge Gains

The Ultimate Momentum Oscillator For Huge Gains
By Travis W

Momentum oscillators are commonly used to find trading opportunities. One that I use often and have found to be ideal for new traders is the Williams Percent R oscillator.

The oscillating category of indicators "oscillate" or zig zag up and down. Most oscillators fluctuate above and below a center line or between set levels as its value changes over time. Oscillators can remain at extreme levels (overbought or oversold) for extended periods, but they cannot trend for a sustained period.

A momentum oscillator measures the acceleration or deceleration of price rather than the actual price level. As the price of a security rises, price momentum increases. The faster the security rises, the larger the increase in momentum. Once this rise begins to slow, momentum will also slow.

Now that we have the technicalities out of the way, here is how I use the Williams Percent R oscillator:

The indicator measures overbought and oversold market conditions. It's usually plotted on a chart using negative numbers with a scale ranging from 0 to -100. With Williams Percent R, oversold conditions are indicated by values in the -80 to -100 range and overbought conditions are signaled by values in the 0 to -20 range.

On most stock charts you will see two horizontal lines at the -20 and -80 levels. These lines represent the overbought/oversold areas of the indicator and serve as your "trigger" lines. The trigger lines will alert you to when a new trade is on the horizon.

Here is the simplicity of the Williams Percent R, it's one line and all you have to do is wait for it to either swing down to -80 or rise up to -20, that's it. When the prevailing trend is rising, I generally wait for the oscillator to drop to -80. Once it reaches this level and begins to rise, I wait for price to confirm a change in trend and then I enter the trade.

I know what you're probably thinking, "that that sounds too simple." At least that's what I thought when my millionaire mentor first showed the method to me. My first year or two of profit was solely from the Williams Percent R momentum oscillator.

I was skeptical at first, but my results turned me into a believer.

A momentum oscillator, or any indicator for that matter, acts as an alert to study price action a little more closely. It is therefore best, as with all these types of indicators, to wait for the underlying price to change direction before going with the trade.

The Williams Percent R is indeed my favorite momentum indicator. It has by far made me more money than any other indicator I've used. Even though this has been my experience that does not mean that it's the best indicator for you to use.

Visit Learn-Stock-Options-Trading.com to find the options trading indicator that's right for you. http://www.learn-stock-options-trading.com/ is a web-based home study course for investors who want to learn the basics of stock options trading. I "share" my option trading tips, techniques, and strategies with you instead of "selling" them to you.

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Comments

[RT]

You should talk to the guys over at QuantumMomentum. They have a few custom indicators that I think you would like.