Forex Average Daily Range in Pips

by Dec 10, 2020What Is Forex

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What is Forex Daily Range in Pips

Forex daily range in pips defines how much pips the price of a certain currency pair has moved in a certain period of time.

The range is the difference between maximum and minimum price of a currency pair.

Here is an example.

In the image below you can see H4 time frame, four hour time frame, where I have drawn a line between maximum and minimum on one candle.

The difference between maximum and minimum is 27.5 pips. That is pip range on a 4H time frame.

What is pip range in Forex_example 1

To define a pip range you need to have a time frame on which you will define that pip range.

If you say simply pip range is 100 pips it will not mean anything because you do not know what the time frame is. Without a time frame pip range makes no sense because you cannot use it in your favor.

When you put the number of pips in some period of time then it will make sense.

Here is why.

I will take 100 pips as a number of pips in a certain time frame.

If I put that 100 pips in a daily time frame then I know that the currency pair has moved 100 pips in a day.

The difference between maximum and minimum was 100 pips. With this information I can calculate how much I could make money if I bought or sold that currency pair.

With the number of pips I can calculate the amount of money I could make with standard, mini or micro lot size.

What else can I use this information for?

I can see the currency pair move a lot in a day. Is it a slow or fast pair where I mean by fast or slow, does the pair have volatility or not.

Any pair that has a pip range larger than 50 pips in a day time frame is a volatile pair. Non volatile pairs have pip range less than 30 pips.

What is Average Daily Range in Forex

In the first part of this article I have explained what is Forex daily range in pips and what is daily range.

Now I will explain what is Forex average daily range in pips to explain why it is more important average daily range than range for one day.

When you have daily range on a certain currency pair you know what was range for that day.

If you want to know what is range on a weekly basis you will need to know what is daily range on five days in a week.

What is daily range on Monday and up to Friday.

Using all five days you can extract what is average daily range in pips. Average daily range in pips is the average number that will give you an approximate possible number of pips you can expect in one period.

That period can be two days or any number of days larger than one day. Larger than one day because if you have only for one day then you do not need average. You need only for one day and that is called daily range.

When you have daily range for each day in a week, then you can calculate average daily range in pips.

How to Calculate Forex Average Daily Range in Pips

To calculate the average daily range in pips you need to have a pip range for each day in a range of days you want to have this average.

If you want to have an average daily range on a weekly basis then you need to have 5 days daily range.

You need daily range for Monday, Tuesday, Wednesday, Thursday and Friday.

Let’s see one example.

What is daily range in Forex

In the image above I have put one image where I have written the number of pips on each candle in a week.

Now you need to take those 5 numbers and add them up.

Monday + Tuesday + Wednesday + Thursday + Friday

72.4 + 72.4 + 91.3 + 80 + 31.7 = 347.8

With the number you get, and that is 347.8, you need to calculate average number.

Average daily range is calculated like this:

Average Daily Range = 347.8 / 5

Average Daily Range = 69.56 pips

The average daily range in the week for this pair is 69.56 pips.

With this information you now know what you can expect as the average daily range in pips in a week. If you would like to get better results and more accurate you could take a month period and extract daily ranges.

With more data you would get a better overview how the pair behaves and what is average daily range in pips.

What is Average Daily Range on Currency Pairs

Now, each currency pair has a different average daily range. Each currency has different factors that influence the price.

Some currencies have factors that influence them on a weekly basis or monthly basis. When that happens you can see daily range increases on those days.

Factors that influence the average daily range are news on a daily basis, macroeconomic factors in each country, politics and country health status.

On the other side there are currencies that are more attractive then others so they have more volatility. That means more traders are trading them.

The currency pairs that have higher average daily range are EURUSD, GBPUSD, EURGBP, GBPJPY, USDJPY and some others.

To give you a better overview on currency pairs average daily range here is a chart. 

Trading session pip range -comparison

On the image above you can see a chart that shows average pip on trading sessions.

Trading session range is the same as average daily range. I have taken a pip range on each session through one year period and extracted the data.

While there are four trading sessions I have for range data on each currency pair.

You can see that most pairs have average range above 30 pips which is a nice number. The most volatile pairs have average range more than 50 pips.

If you want to check each pair from the chart to see what is daily average range, what is average weekly range and what is average monthly range then I suggest you check these links.

 

  1. EUR/USD Pip Range Analysis
  2. GBP/JPY Pip Range Analysis – Account Widow Maker
  3. GBP/USD Pip Range Analysis – Cable Connection
  4. EUR/GBP Pip Range Analysis – Forex Under the See Level
  5. EUR/JPY Pip Range Analysis – Euro Japan Samurai
  6. EUR/CHF Analysis-The Biggest Crash in the Forex History
  7. USD/CAD Pip Range Analysis – Oil UP Pair DOWN
  8. USD/JPY Pip Range Analysis – Ninja Pair
  9. USD/CHF Pip Range Analysis – Swissie
  10. AUD/USD Pip Range Analysis
  11. AUD/JPY Pip Range Analysis
  12. NZD/USD Pip Range Analysis

Conclusion

Forex average daily range in pips is a good information to know because it helps you to filter the currency pairs that are volatile.

When the currency pair is volatile then you can expect that you will have much more chances to make money on a daily basis.

Without volatility you will not be able to make money on a daily basis or on any time frame.

The information I have provided you in the charts can help you to calculate the average range of any pair and to find out if it is worthy to trade that pair.

If you want to know more about Forex and what is pip range in Forex you should read more details about what is pip in Forex and how to calculate the pip value.

Frano Grgić

Frano Grgić

A Forex trader since 2009. I like to share my knowledge and I like to analyze the markets. My goal is to have a website which will be the first choice for traders and beginners. Market analysis is featured by Forex Factory next to large publications like DailyFX, Bloomberg... GetKnowTrading is becoming recognized among traders as a website with simple and effective market analysis.

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