Williams Commercial Index indicator

We have devoted the last three articles to trading strategies based on the positions of futures market participants. Today I will tell you about one of the indicators that makes analyzing easier and faster futures рынков — WILLCO (Williams Commercial Index), автором которого является небезызвестный Ларри Уильямс.

In order to standardize the values of open positions of operators [(hedgers) in relation to open interest, Larry Williams, similarly to other indicators (e.g., SOT Indices), used the stochastic formula, which looks like this:

Alas, in his books Larry doesn't reveal half of what he knows and could tell you, so getting the WILLCO formula is a problem for many. However, I have found it, and I give you the opportunity not to waste your time looking for it.

The WILLCO formula looks like this:

where
— PE/OI - ratio of net positions (net long open positions) of operators to open interest.
— Zakr - value of the current week's ratio [Net long positions of operators/Open Interest].
— Min - minimum value of the relation [Net long operator positions/Open Interest].
— Max - maximum value of the ratio [Net long operator positions/Open Interest].

So what does the Williams Commercial Index represent?

Williams Commercial Index includes both open interest data and aggregate (net long) positions of operators. Since we get an indicator based on two indicators, the following levels are used for trading:
— если значение WILLCO >75%we should expect a price increase;
— если значение WILLCO <25%we should expect the price to drop.

As with SOT indices, you can choose any indicator value as a critical level as well as a period. I have given the classic variant of levels.

WILLCO Interpretation

It is very important to properly interpret and understand market indicators, and WILLCO is no exception. You must understand that it reflects both the mood of one group of market participants and the economic activity in the market, which is expressed as open interest.

Поскольку интерпретация, а так же алгоритм построения данного индикатора в MS Excel, — чрезвычайно объемный материал, он не войдёт в статью.