Expose Trends & Volatility Using Range Bars

Developed in the mid-90’s by Brazilian broker and trader, Vincente Nicolellis, Range Bars offer day traders a different perspective on the markets by eliminating time from the equation & focusing solely on price.

The non-chronologically based charting method is designed to remove the “noise” from the markets which can aid in one’s technical analysis to expose trends and volatility.

Range bars possess the following unique characteristics:

  • Each bar represents a user defined movement of price
  • All range bars are equal in height as the user defined range is constant
  • The open of a range bar is one tick above or below the close of the preceding bar
  • The time scale displayed on the x-axis is not fixed

Similar to choosing an appropriate timeframe for a traditional Japanese candlestick, 1 minute, 5-minute etcetera, Range Bars require the trader to determine which “range” in price to build each bar. Because a number of instruments vary in tick size, choosing the range value is likely not universal across the board.

For example, a 4 Range Chart for the E-mini S&P 500 Contract, whose tick size is .25, might be an ideal trading range during times of low volatility. Conversely, a 4 Range Chart for the EUR|USD forex pair, with a tick size of .00001, could print multiple range bars every second.

The following illustration breaks down the bar structure for both a down & up 10 Range Bar. Note the difference in the high & low for each bar is 10 ticks. Plus, the close of the red or down bar is one tick below the open of the green or up bar.

NinjaTrader offers a myriad of different bar types and chart styles to fit the unique needs of every trader. Download NinjaTrader for free today and find the bar type that’s ideal for your style of trading!