High Low Range

Market volatility is an important factor that determines the profit potential of a day trader. You might have noticed that sometimes Nifty gaps up and spends the entire day in a tight trading range, making day trading very difficult. Further a volatility measure is very much required for knowing what kind of a move to expect and to decide where to book the profits ones you are in a trade..

Markets are cyclical and alternate between high volatility and low volatility. We are going through a high volatility phase. This is temporary and will pass.People generally use ATR as a proxy for volatility. But this measure includes gaps and is not a very true measure from a day trading point of view. High Low range or intraday range is a better proxy of intraday volatility.

Sunil Saranjame of Indian Market Monitor regularly tracks many Market Internals like H-L Range and relative strength. He has made a post on HL Range this week.Please do not ask me to explain more. SS will be the right person to do it Click here to read the post