Better Range Finder Indicator ThinkorSwim TOS Script

This ThinkorSwim Indicator is a better range-finder that has the goal to set reasonable expectations for intraday price movements.

To set reasonable expectations, I need knowledge such as:

• What is the average price change between the open and the high of the morning?
• What average distance does price change between the open and the close of each day?
• What is the daily average price range?

Once the data have been collected, standard deviations are calculated. After that, the average price range of each item is increased by one standard deviation. Statistics show that intra-day price movements should be within this expanded range (avg range plus 1SD) approximately 70% of the times.

Any price movement in this extended range would be considered “normal.” A price move beyond this range would be considered a significant day-to-day change.

The Better Range Finder The chart plots the normal and average ranges to show intra-day price movements. The full range extends upward from the opening to show how much price could rise if it opened and continues higher throughout the day. To show how far prices may fall, the entire range is also extended downwards from the open.

As the day progresses the lower and upper range boundaries are moved inward to reflect actual prices movement. The range size will extend the upper boundaries from the current low, while the lower boundaries will move downwards from the high.

The areas that represent the average open to-HOD or open-to–LOD are marked with paint. The line separating the two areas is called the open of that day.

This video shows a move that is slightly smaller than average.

This video shows a bigger than average move, but it is still within the limits of acceptable. “normal” move.

The default look back period used to calculate the average range is thirty days. This can be modified from the chart settings panel.

 Download now Better Range Finder Indicator ThinkorSwim TOS Script

You may find the video below helpful in explaining the concept. The presenter says that the daily average lines are projected upward from the lowest point in the day and down from the highest. That is exactly how I wrote my script.

The average daily range discussed in the video is represented by the lime green lines. The range is expanded by the purple lines, which are one standard deviation higher.

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