All language subtitles for 6. Trading Range As A Profit Tool

A trading range can also give you a feel for anticipated price gains and price losses in terms of like,

let's say, your own profits from trading in this particular security.

And you can think of the terms of the range in terms of amounts, you know, what is the difference

between them?

So if we use, let's say, a year on day one, something had a high of well, we'll use it as an example,

ten dollars and let a low of eight dollars using absolute terms.

While we would say it would have a two dollar trading range.

Right.

To eight minus 10, minus eight, for example.

Very simple.

So they will give you an idea of potential profit around there.

So if we look at this as an example, even closer, let's say over five days, you have these different

price trading ranges.

Now, these are not the actual prices.

This is the range.

Like the previous example show this.

We had a two dollar range, maybe day two was three dollars, and then one dollar for dollar and two

dollars over five days.

You have this total ranges of effect.

Twelve dollars and divide that by the five days you get your average daily trading range of two dollars

and 40 cents.

Right.

The simple math of that point, again, that prices in this example, we're looking at the trading range

as a technical indicator and maybe as a profit dissipated.

So we have two dollars and 40 cents.

So let's say over that daily range, that two dollars for it.

Since then, you know, if you have bought at the absolute low in this particular example over that

days of trading then and you sold at the absolute high, then you would have made two dollars and 40

cents per share of security that you had for that particular for that particular day or, you know,

during that particular series.

Now, is that, you know, common to buy at the absolute low and sell at the absolute high?

No, not at all.

But you might be near each of those extremes as far as, you know, getting that and get a feel for

what are your potential profits.

So something that might have a high range and you're buying maybe near the low, you know, and he has

a high absolute trading range.

You might have more opportunity for profit than something that's at a lower or more narrower range.

So kind of gets into the volatility of security as well to be kind of anticipate.

Things with higher ranges might give you more opportunities, but you have to look at so many other

things as well, too.

But trading range can give you an idea of a lot of things you can look at from a technical analysis

standpoint.