Williams Chunnel is using Williams Percent Range indicator to identify the overbought and oversold levels and enter into positions when the trend is reversing.
This is a short-term strategy, which executes around 7 trades per day on average and may open multiple positions in the same direction.
Williams Percent Range is a momentum indicator, ranging from 0 to -100, which shows where the closing price of the current bar is in relation to the highs and lows over the given period.
The MetaTrader 4’s default triggers for the overbought level (sell signal) is -20 and -80 for the oversold level (buy signal) – these values indicate that the current price is near the highs/lows in the current period.
This strategy is using much stricter levels of -4 and -96 in order to limit the number of false signals.
The strategy is meant to open the positions when the current trend is getting weaker and can be expected to reverse. The strategy is using 15-minute bars.
The strategy has a relatively high accuracy - in the long term, the ratio of winning to losing trades is expected to be around 2:1.
The buy signals will be generated if the value of the indicator is below -96. Accordingly, the sell signal will be generated if the value of the indicator is above -4.
The throttle settings limit the number of signals that can be generated to 1 per 15 minutes.
The strategy does not use the take-profit, stop-loss, or trailing stop orders.
The positions will be closed and reversed when the opposite direction signal is generated, meaning that for example the long position will be reversed once the oscillator rises above -4.
Absence of take-profit orders allows the strategy to capture longer term moves.
If the strategy already has a position and an additional signal in the same direction is generated, further position will be opened.
During the strong trends in either directions the indicator value may remain in the overbought / oversold area for the prolonged periods of time and false signals will be more frequent in such periods.