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Historical Trading Range

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The historical trading range is the lowest and highest price at which a security has been sold. For example, say Company A went public in 1993 at a price of $24 per share. If its lowest price since then was $19 and its highest price $27, its historical trading range is $19 to $27. For stocks that have traded for many decades, a recent historical trading range (say, the last 25 years) is sometimes used. For technical analysts, the bottom of a historical trading range typically represents a support level for the stock. In turn, the top of a historical trading range represents a resistance level. If the stock breaks out of its historical trading range at either the top or bottom, then it may continue to reach new highs or lows and thus expand its historical trading range. Note that a historical trading range is sometimes used relative to the stock's price earnings ratio, as in "Company A is trading near the bottom of its historical trading range of 11 to 15 times forward earnings."



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