Range is a term used to describe when a price is trading between a defined high and low, moving within these two boundaries without breaking out from them.
The “range” is the difference between a market’s highest and lowest price in a given period.
It is mostly used as an indicator of volatility.
If a market has a wide range, it’s a sign that it was volatile over the period analyzed.
How to Use Range
As with any indicator of volatility, range can be used as a means of measuring a trade’s potential risk.
If a market is trading with a wide range, then the risk associated with trading it will tend to be higher.
It can also be used to identify support and resistance levels
How to Calculate Range
To calculate a range, you just take the highest price point that is reached in the period you are analyzing and subtract the lowest price point.
For example, GPB/USD hit a high of 1.2090 and a low of 1.2010 on a given trading day. Its range for that day would be 1.2090 – 1.2010 = 90 pips.