Percent R Review
Learn How to Trade Trends With Williams Percent R
Price Headley is a well respected trend trader of 20 years and author of the book, Big Trends in Trading. He is also a chartered financial analyst (CFA) charterholder and a chartered market technician (CMT) charterholder.
He has recently made his new trend trading strategy public with a 3 DVD course, titled Percent R.
What indicator does he use to trade trends?
Williams %R!
Yep, Price Headley uses the same indicator that I use but he uses it in a totally different way - with a completely different setting that I use (he uses Williams %R with a 30 period setting). That is when I knew that I had to have this course.
So, here is the problem...
How do you know if a stock is likely going to move into a strong trend or if it just overbought? This has plagued me for years. Take a look at the following chart example and I'll show you what I mean...
Look at the candle that I circled on this chart. Now imagine that you are looking at this stock on that day. Would you know ahead of time that this stock is likely going to skyrocket over the next couple weeks? I wouldn't have. I would have thought that this stock was overbought and it would likely move lower due to the doji candlestick.
I would have been wrong.
But, using this simple methodology with Williams %R, you can tell ahead of time that a stock like this will likely develop into a strong trend. Then you can jump on it or wait for what he calls a "retest" (basically a pull back) which he explains in the videos.
And the exit strategy with Williams %R is just as good as the entry strategy. In the example above, you would have been able to ride that trend all the way up and got out before the double top developed.
Here is where it gets interesting.
I created a scan on StockCharts.com specifically for this strategy just to see how effective it was. Then, I ran the scan on a day when the Dow, Nasdaq, and S&P 500 was down for the day. The scan returned 50 stocks and all of them were up for the day. Some were up as much as 7% and one was up over 12% - on a down day in the market. Pretty impressive.
This trading strategy works in all time frames. Price Headley uses this method mostly off of daily and weekly charts but he says that it can also be used on intra day charts. He recommends the hourly and 15 minute time frames for day trading.
This is a momentum-based trading strategy (it is the same strategy that he teaches his students). He has strict rules based on the entry and the exit and a confirmation technique that is easy to learn.
I'm not sure how well this strategy holds up in a "trading range" type of market environment. But the entry and exit technique seems like it would keep your losers small if the market gets choppy.
The bad part?
This home study course will set you back $247. Ouch. But, this isn't an ebook. You get the Percent R course delivered to your home in a 3-DVD set. All 3 DVD's are filled with tons of example trades that won't leave you guessing as to how to work the strategy.
So, if you are looking for a strategy to trade some of those high-flying momentum stocks, then this strategy may be for you.
