# What is the denominator in calculating daily range as a percentage?

Assume a stock had an open of \$100 and a close of \$102. If the high of the day was \$103 and the low was \$99, the daily range is obviously \$4. What is the best way to express the daily range in terms of percentage? If you take the range and divide it by the open, you get 4.00%. If you take the high and divide it by the low you get 4.04%. The first method seems more intuitive but the second method is more computationally efficient and may be good enough. Is there an industry standard for this calculation? - why is it more computationally efficient? – SRKX Oct 13 '11 at 5:56 Because in the first case you have to subtract then divide. In the second you only have to divide. – Joshua Chance Oct 13 '11 at 7:18 ah ok. but that's$O(1)\$. not sure I really see the point. –  SRKX Oct 13 '11 at 7:39
SRKX: The second method divides two numbers that are directly calculated. The first method takes those same numbers and adds a third number for which care must be taken that it is the correct one. The open 12-days ago, for an n=12 calculation, can be confused with 11 or 13 and then the calculation would be wrong. The second method adds complexity that is prone to OBO error. –  Milktrader Oct 13 '11 at 10:36

It seems that the daily range would be based on the open. The close is just part of the range of that day (it must fall within the range, it just happens to be the last transaction of that day).

From a practical perspective, if you were looking for non-normal price deviations, you could not calculate whether the price at time N is within its normal distribution of past price ranges as the day progresses if you were waiting for the closing price to get your denominator.

-
The open makes the most sense as a point of reference. If you observe the range over the last n days, then the open of the first day is the denominator. (Hi - Lo) / Open. –  Milktrader Oct 20 '11 at 13:42