When you are ready to buy a stock, you will log into your brokerage account and search for the stock you want to buy. You’ll notice a chart that shows the variation in price over time and a smaller section showing the day range. You may be thinking to yourself, especially as a long term investor, why do I care about the trade range for the day? The day range is a measurement showing the spread of the high and low price of the stock on a the current day. Depending on how you are investing this metric can have varying levels of importance. If you are a day trader, then this metric is going to have much more significance to you, as the shift of a few percentages can massively change your success. Long term investors may look at this to see if they are getting the best price on that day. Trading ranges are also a investing strategy where investors will look to buy stocks in a certain range as it provides a way to understand the volatility of a price change. Every stock market asset no matter how safe or risky will have some kind of variation in price. Its just that this variation has different meanings for each investor.
Now you may be wondering are there ways investors use the day trade range or ranges in general?
The answer of course is yes. When a stock rises or falls below a given range it makes a tremendous difference on the momentum of a stock. When a sharp rise or fall occurs you will begin to see activity happen in things like trading volume which will compound any share price impacts. Sharp rises will lead to increased consumption of an asset. Sharp decreases will signal that more people are exiting a position.
The best way to know if the day trade range will be useful to you is to consider your investing strategy. Not every strategy places an equal value on all metrics. Metrics are there to help guide our assignment of value, so the better you know what you value the better you will be at selecting the right tools to measure with.