[KOL Analysis] 3 ESSENTIAL FEATURES OF DAILY TRADING RANGE-NAZRI NAS

We will be discussing a very basic but highly useful resource in today's lesson which can provide valuable information to the trader.

Essentially, there are many ways in which you can use a pair's daily trading range information to help you do better trades. Currency graph is the major source of reference for traders in order for them to know or identify the markets conditions other than the economic news. Currency graph is divided into 2 main axes:

1) X axis: fixed data/information (time)

2) Y axis: fluctuate data/information (currency price)

These two combinations will produce a wave presenting the change in currency price is equivalent to the change of time. Currency volatility are usually move in an approximately similar range according to certain seasons.

This range equivalence graph movement can help us to estimate our potential trade profits or risks based on the entry point within that range movement.

The range for each currency pair is not identical. Some of the pairs can move less than 50 pips a day while some of them can move over 150 pips in a day.

WHAT IS THE “DAILY TRADING RANGE”？

Daily Trading Range is defined as the average of graph volatility within a day starting from the market is open until it is closed.

It is measured from the lowest price to the highest within a day. The way to use DAILY TRADING RANGE is that you can use the TF Daily, click on candlestick one by one, plot it at the lowest price and project it to the highest price on the same candlestick. After that, you will find that the length of the daily candle is almost similar to the pair.

Apart from that, you can also use the TF H1.

i. Click Ctrl + Y and the vertical line will appear on your graphs screen.

ii. That line is the dividing line for the day.

iii. Then look at the lowest and highest prices between the two lines.

iv. Click the crosshair and project it to the two points. You will be able to read the DAILY TRADING RANGE for that pair.

WHAT IS THE IMPORTANCE OF “DAILY TRADING RANGE”？

The Daily Trading Range can help us to identify the crucial information with regard to the currency pairs that we are currently analyzing.

It is helpful for us to trace 3 elements:

a) Currency volatility.

b) Maximum value of stop loss.

c) Maximum value of target profit.

These three elements are immensely vital in ensuring that a trading point is located in the normal or customary relationship of that currency pair.

Alright, now we are learning one by one of the three elements mentioned above.

a) CURRENCY VOLATILITY

If you gathered all the currency pairs and arrange it according to the DAILY TRADING RANGE as the diagram prepared by me, you will notice that the movement distance of each currency pair is different. The diagram shown is merely for illustration as the DAILY TRADING RANGE will change according to the seasons.

For your information, the DAILY TRADING RANGE will change over time. It usually changes once a month. So, if you want to get the DAILY TRADING RANGE for today, you only need to compare the DAILY TRADING RANGE within a month or 2 months.

Here, you can compare which of the pairs are move faster and which are move slower. If you are targeting for a low-risk trading, choose a pair which its DAILY TRADING RANGE is lower. For the new traders who are just getting started to trade, it is recommended for you to trade currency pair which its DAILY TRADING RANGE is lower to minimize the risk of loss.

However, if you are targeting for a high-risk trading with a rapid and huge profit potential, you may choose a currency pair which its TRADING RANGE is higher. Logically, higher trading risk is usually will produce higher profit potential.

b) MAXIMUM VALUE OF STOP LOSS

The maximum SLs value can be achieved by measuring the distance from your entry to the maximum point of that day.

For example, if you are in the SELL position, click on the highest price of that day and project it to your entry position. As a precaution step, add 1 pip or more for the SLs distance.

If the graph moves more than 1 pip above the maximum price, then there is no potential to decline anymore.

c) MAXIMUM VALUE OF TARGET PROFIT

Besides, the maximum value of target profit also can be obtained from the DAILY TRADING RANGE. This can be achieved by measuring the distance from your entry position to the maximum point in accordance to the BUY or SELL position.

For example, if you are in the SELL position, click on the lowest price on that day and project it to your entry position.

However, it is recommended for you to set your target profit at the price spots in which the graphs have made any rejection before to ensure your trade is safer. A small profit is always better instead of getting loss.

OTHER THINGS ABOUT 'DAILY TRADING RANGE'

The market will usually move in 2 conditions:

1) Normal movements: The market movement that move according to the current trends.

2) Momentum movement: The market movement influenced by economic news.

Both types of movements mentioned above will produce different Daily Trading Range. Hence, to get a more accurate interpretation, you can estimate the current movement of the graph by comparing the equivalent movement with the day you are trading.

For example, if today's market movement is more influenced by economic news, you could estimate today's volatility movement by measuring the history of previous days' movements in which were influenced by economic news.

Markets are influenced by economic news often show a drastic candlestick formation and its length indicates a significant difference from previous candle movements.

Whereas, if todays graph moves normally with a regular candle size, you can estimate today's maximum volatility movement by referring to the history of the previous day's graphs moving normally without a drastic candlestick formation.

CONCLUSION

By understanding the Daily Trading Range, it will help you to trade according to the nature of the currency based on the movements exist previously. This is how a market analyst technically estimates the next market movement based on earlier movements history.

Thats all for now. May this sharing benefits all the readers.

Author: NAZRI NAS

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Nazri Naz started his career as a trader in 2007. He began to create his name through the forex education segment in Malaysia since 2008 by introducing a systematic forex technique called TABS - Teknik Analisa Bersistem (in Bahasa) or Systematic Trade Technique.

He has been awarded with several global awards such as:

No. 1 Best Trading Guru in Malaysia

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Asia Traders Awards 2019

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Asia Traders Awards 2018

Currently, he is actively sharing his knowledge and expertise in forex trading on social media in the form of writing as well as via FB Live.

He shares important articles & beneficial tips a lot, and often be the subject of attention for many traders in Malaysia.

Besides, he is also the sole owner of Nazri Nas Trading Academy (Kuala Lumpur), formerly known as KL Traders Studio. The academy aims to help and benefit more Malaysians for them to learn and strengthen their knowledge and proficiency in forex trading.

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