What is a trading range
A trading range is the distance between the highest and the lowest price an instrument traded at during a chosen period.
The term is also used in a broader sense. A market that moves sideways between a ceiling (resistance) and a floor (support) for a while, without a clear trend, is said to be "in a trading range" or range-bound.
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Worked example (hypothetical)
Take a currency pair such as EUR/USD (see Fiber) on a daily chart:
- High (H): the top of the day's candle, including the upper wick.
- Low (L): the bottom of the candle, including the lower wick.
- Range = H − L, usually stated in pips for forex and in points for indices or metals.
Suppose the price spent the session moving between H and L and closed somewhere between them. The day's trading range is H − L, whatever the open and close were. If the next several days also stay between roughly the same H and L, analysts describe a range-bound market with resistance near H and support near L.
To turn a price distance into pips or account money for a given position size, use the tools on the calculators page.
Where you see the term
- Trading platforms. In MetaTrader 4 and MetaTrader 5, the High and Low of each candle appear in the Data Window and in the quote details. The range is the gap between them.
- Indicators. Average True Range and similar tools average the range over many bars. See average daily range.
- Market reports and news. For example: "The pair stayed in a tight trading range ahead of the data release," or "Gold broke out of its range."
- Chart patterns. Rectangles, flags and triangles are forms of a range. See chart patterns and consolidation.
Precise definition and edge cases
- Simple range vs true range. The simple range is High − Low. The true range also covers a gap from the previous close. It is the largest of three distances: High − Low, High − previous close, and previous close − Low. ATR is built on the true range.
- Wicks or bodies. The formal range uses wicks. Some traders mark ranges using candle bodies (open and close) only, so check which method a source uses.
- Bid vs ask. MetaTrader charts are normally drawn from bid prices. The ask high can sit above the bid high by the spread, so a range measured on the chart may differ from your fill prices.
- Session boundaries. A daily range depends on when the "day" starts. Broker server time and the time zone of a data feed can shift candle highs and lows.
- Thin or volatile markets. A single spike, such as a flash crash, can widen the range sharply without showing typical behaviour.
Range trading strategy (what the term means)
A "range trading strategy" is the general idea of treating support and resistance as reference levels while the market moves sideways. Ranges end with breakouts, and false breakouts are common. Leveraged forex and CFD trading can lose money fast, including when a range breaks. For method and risk, see trading strategies, technical analysis and risk management.
Related terms
- Average daily range
- Consolidation
- Annualized volatility
- Big figure
- Bull market and bear market
- Trading glossary
Frequent questions
What is a trading range in simple words?
It is the gap between the highest and lowest price in a period, such as a candle, a day or a week.
What does "range-bound market" mean?
The price keeps moving between a support and a resistance level instead of trending up or down.
Is the trading range the same as volatility?
No. The range measures a single period. Volatility measures how much prices vary over time, and indicators like ATR average many ranges.
Why does my range differ from a news report?
The sources may use different session times, bid or ask prices, wicks or bodies, or different data feeds.