Lone Range(r)

High Low

The Range has many uses in trading. Some traders use it as a reason for entering into a new trade. Some traders use it to take profits on an existing position. Other traders use it to exit a losing trade to stop further loss.

The Range is the mathematical difference between the High Price and the Low Price in any given time interval (whether an hour or a “day”).

A variation of the Range is the True Range. It’s a concept described by Welles Wilder in New Concepts in Technical Trading Systems

Welles went beyond using merely the High and Low price to calculate Range. He wanted to account for gaps, limit moves, and small high-low ranges. Therefore, he took the greatest of the following three calculations to measure “True” Range”

(a) The current High less the current Low.
(b) The absolute value of the current High less the previous Close.
(c) The absolute value of the current Low less the previous Close.

...continued tomorrow...

Copyright 2008 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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