CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved.

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# Range definition

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 analysed.

### Utilising 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 – if a market has been trading within a certain range for a long period, then the upper and lower limits of that range can be taken as strong areas of support and resistance.

### Calculating range

To calculate a market’s range, you just take the highest price point that it reached in the period you are analysing, and take away the lowest price point. Say, for instance, that gold hit a high of 1265 and a low of 1246 on a given trading day. Its range for that day would be \$1265 - \$1246 = \$19.

If the next day it hit a high of \$1256 and a low of \$1247, it would be \$9 – meaning that it was much more volatile on the previous day.

### Comparing range

There are lots of factors that can affect range, and what is considered wide for one market may be considered narrow for another. For example, an \$8 weekly range for a US blue chip like Wal-Mart would be viewed as highly volatile – whereas gold regularly moves more than \$8 in a single day. And even in equities, range can differ hugely from sector to sector.

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