The Definitive Guide to Futures Trading by Larry Williams
This is one of the few books that I recommend all traders should read.
Once you have a good grasp of the Fibonacci method, the Williams method shouldn't be difficult to learn because of the similarities in the ways the forecasts are calculated. As you'll recall, the Fibonacci method calculated a possible market reversal by using two peaks or lows, this is also the case for the Williams method. Once again, when looking at a daily commodity price chart, identify two market peaks or lows, then count the trading days in between the two established points. You then multiply the number of trading days by 1.28.
Here's where the two methods differ even more. If two peaks were used to calculate the expected days until a reversal, the number given by multiplying the trading days in between highs by 1.28 is added to the lowest closing day in between the two highs. ( see Example 1 ) If you'll recall in the Fibonacci method, this reversal number was added to the second peak or low.
Example: 10 trading days between peaks (x) 1.28= 12.8 trading days.
Approximately 12.8 trading days from the lowest close between peaks should be a reversal day.
Likewise, if two lows were used to calculate the reversal day, you would add the number given by multiplying the trading days in between lows by 1.28 to the highest closing day in between the two lows. Again, at least seven trading days between the two highs or lows is recommended for the best results.
I recommend applying these methods to some charts on your own. I've obviously chosen examples that illustrate the successful possibilities of these two tools. When used in conjunction, the Fibonacci method and the Williams method may pick reversal points that are within a day or two of each other.( see Example 2 ) In some cases, even the same exact day will be chosen. In these circumstances, a very high probability of a market reversal exists.
( Example 1 )
The second high chosen for this example had the same high as the previous day. In these circumstances, use the latest day with that same high. This will give you a more accurate reading for a projected reversal. As always, confirm this anticipated move with a stochastic indicator.
( Example 2 )
