Wide-ranging days, also known as wide-range or extreme days, are times when the range between the high and low prices for a stock on a given day are much further apart than on a typical day. These wide-ranging days can help investors detect potential changes in the direction of the stock price and potential major trend reversals. For example, should a stock experience higher highs and lower lows on a specific day, this could be an indication that the price of the stock is likely turning the corner and changing directions in a major way.

Investors and analysts use two technical indicators to measure wide-ranging days: average true range (ATR) and volatility ratio. The ATR tool is used to compare the trading range between two or more days, while the volatility ratio can be used as a type of technical indicator to identify wide-ranging days automatically. Volatility ratio is measured using a 14-day period, and typically when the measure exceeds a reading of 2.0 it is generally considered a wide-ranging day.

The ATR is used to measure the range between the open and the close, based on the highest high to lowest low of the past 14 days. The ATR will then average out the differences in the high and low of each day, so investors can compare and measure the movements of different securities over a period of time. This is helpful to provide an overall sense of the range of activity and can help investors better understand the performance of the security.

Wide-range days are especially useful when used in combination with charting and other technical indicators. This is because a wide-ranging day could signal a reversal in the trend of the security, and by combining this signal with other type of analysis investors can form a better understanding of the stock’s movements. Moreover, wide-ranging days can help investors develop a better risk management strategy and decide on when to buy and sell their positions.

At the end of the day, wide-ranging days are an important tool for investors and analysts looking to gain an edge in the stock market. By measuring the range between the highs and the lows on different days, investors can gain a better understanding of a stock’s price movements. Furthermore, with the use of technical indicators like the ATR, volatility ratio, and other charting tools, investors can better identify major trend reversals and determine the best time to enter and exit their positions in the market.