Buy and sell signals based on Larry Williams’s exponential moving average strategy 9.4 for failed reversals.
Who is he?
Larry Williams is an American stock and commodity trader, author of 11 books and creator of indicators such as the “Williams%R” and the “Ultimate Oscillator”, with over 60 years of trading experience.
Won the 1987 World Cup Championship of Futures Trading, turning $10,000 to over $1,100,000 in 12 months with real money. Ten years later, his daughter Michelle Williams won the same competition.
How does the indicator work?
The indicator activates the buy and sell signal when their respective conditions are met. For an uptrend, we need a candle turning the 9 period EMA down and closing below it, followed by a candle turning the 9 period EMA up and closing above it, with a low higher than the previous candle’s low. For a downtrend, we need a candle turning the 9 period EMA up and closing above it, followed by a candle turning the 9 period EMA down and closing below it, with a high lower than the previous candle’s high.
How to use it?
The way proposed by Larry Williams, is to enter a trade with a buy stop order one tick above the high of the candle with the buy signal, placing the stop loss order one tick below the previous candle’s low. When there’s a sell signal instead, place a sell stop order one tick below the low of the candle with the sell signal, and a stop loss one tick above the previous candle’s high.
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If the entry stop order is not filled on the next candle, you can cancel it and wait for another signal.
If filled, it is possible then to trail the stop loss order based on the 9 period EMA and exit the trade when it turns.
Great for entering on failed reversals. You can avoid entering when a longer period moving average (e.g. 20) is in front of the movement or on an opposite direction.
Features you can edit to your preference:
– Distance between the arrow signals and the candle’s high/low
– Type of the Buy and Sell signal arrows, based on the Wingdings font
– Color and size of the Buy and Sell signal arrows
– Color, thickness and style of the exponential moving average