Spread (High - Low)¶
| Name | Type | Prerequisite | Use Cases |
|---|---|---|---|
| Spread (SPD) | Relative Value | OHLC Data | Pairs trading and identifying inter-market arbitrage. |
Definition¶
The Spread indicator typically measures the difference between the High and Low prices for a given period. It is a direct measure of intraday volatility or range.
Mathematical Equation¶
\[
\text{Spread} = \text{High} - \text{Low}
\]
Special cases¶
- Maximum possible value: Unbounded
- Minimum possible value: Unbounded
- Behavior: Shows the numeric difference between two price streams.
Visualization¶
Trading Significance¶
-
Volatility: Expanding spread indicates increasing volatility and potentially higher risk or opportunity. Compressing spread indicates consolidation.
-
Breakout Setup: A period of low spread (narrow range bars) often precedes a significant expansion or breakout.