The Transparent Trader
This video compares the RSI and Williams Percent R oscillators through a head-to-head test on four major forex markets. The strategy rules are identical for both indicators, and the results are shown on both daily and four-hour timeframes from 2008 to 2021. The net profit figure is used to determine which indicator is best, and the tests are done without stop losses. The results show that both indicators have their strengths and weaknesses, but RSI may be the stronger overall. Viewers are encouraged to comment on the findings.
Battle of the Indicators: RSI vs. Williams Percent R
Introduction:
In this article, we will be doing a head-to-head test on two very popular oscillators, Relative Strength Index (RSI) and Williams Percent R. We will be testing them on four major forex markets, namely USD vs. CAD, EUR vs. USD, GBP vs. USD, and USD vs. JPY, on both the daily and 240-minute timeframes. Our main focus will be on the net profit figure to determine which indicator is better. This test will help you decide which oscillator to use for your trading strategy.
Strategy Rules:
Before we dive into the results, let’s take a look at the strategy rules that are identical for both RSI and Williams Percent R. We will be using the levels 20 and 80 to enter and exit trades. When the RSI or Williams Percent R drops below 20, we go into a long trade. When the RSI or Williams Percent R goes above 80, we go into a short trade. We will be using different levels to exit the trades. When we are in a long trade and the RSI or Williams Percent R goes above 70, we will exit that long trade. Similarly, when we are in a short trade and the RSI or Williams Percent R goes above 80, we will exit that short trade.
Getting Started:
Let’s take a look at the charts now to understand how to enter and exit our trades. When you look at the chart, you will notice both RSI and Williams Percent R indicators. The top one is RSI, and the bottom one is Williams Percent R. We have adjusted the lengths of the indicators so that they look more similar. In this demonstration, Williams Percent R is on an 11 period length while RSI is on a 5 period length. However, they look very similar when plotted.
Test Results:
Now, let’s move on to the test results. We have tested the strategy rules on four major forex markets on both daily and 240-minute timeframes. We have used the data from 2008 to 2021 for this test. We have run an optimization of the lengths from one through to 20 on both RSI and Williams Percent R. Our focus is on the net profit figure, and we have used different lengths of the indicators to determine which one is better.
USD vs. CAD:
Let’s take a look at the results on the USD vs. CAD currency pair on the left-hand side of the spreadsheet. We can see that the results on the daily chart are different from the 240-minute chart. On the X-axis, we have the length of the indicators, and on the Y-axis, we have the net profit. The blue line represents the net profit for RSI, while the orange line represents the net profit for Williams Percent R. On the daily chart, the RSI indicator works well on period 1, 3, 4, and 5. However, on the 240-minute chart, both indicators work well early on, but Williams Percent R is stronger in the long run.
GBP vs. USD:
Let’s move on to GBP vs. USD on the next set of results. On the daily chart, the RSI indicator is more stable and works better on periods 4 and 5. On the other hand, Williams Percent R performs poorly early on, but tends to work better on longer periods. On the 240-minute chart, the results are more sporadic, and they tend to flip from RSI to Williams Percent R working well.
USD vs. JPY:
The third set of results are for USD vs. JPY. On the daily chart, the RSI indicator has a stable area on periods 4 and 5. However, the net profit drops off quickly after that. On the other hand, Williams Percent R works better on longer periods. On the 240-minute chart, RSI works better throughout, but Williams Percent R fails to work effectively.
EUR vs. USD:
Lastly, let’s look at the results for EUR vs. USD. On the daily chart, RSI performs well early on, but net profit drops off quickly. Williams Percent R starts to work better on longer periods. On the 240-minute chart, the results are quite poor, and neither indicator works well.
Conclusions:
After analyzing all the results, we can conclude that RSI is better for short-term trades, while Williams Percent R works better in the long run. However, we cannot rely solely on these results, and we should continue to test and improve our trading strategies. We encourage our readers to comment below since they might spot something that we may have missed.
