The Investigator Advantage
Trading Ranges
A trading range is an area where prices for a period of bars remain in a
fairly confined price range. Technical analysts believe that this is a
period where supply and demand for a financial instrument are at
equilibrium. If there is a large price breakout of the trading range, it
shows that suddenly the supply or demand for the financial instrument has
increased. This could signal the beginning of a large price movement.
Investors have been eyeing or hand drawing trading ranges on charts for
years. This has lead to varying opinions among investors about the
definition of trading ranges and about what constitutes a valid breakout
from a trading range. This subjectivity has also made it virtually
impossible to historically test trading ranges. Investigator uses a precise
mathematical definition for trading ranges, as well as precise mathematical
definitions for breakouts from trading ranges.