The daily range (highest price lowest) can be compared to the ADR over a previous interval to signal potential entry and exit points for traders. In the same manner, forex traders should take the selling position once the price is close to the upper ADR line and look for reversal signs. The ADR is a measure of volatility and is useful to describe whether an assets price action is outside the normal during a particular time. The upper ADR level is the most beneficial for bringing in profits. Hence, forex traders should buy when the price is close to the ADR level and the stop loss point is below the last swing low. Since ADR represents an estimated market range, the forex trader can also comprehend the price extremes. To test the volatility of the currencies, traders should experiment with various ATR settings too.įorex traders can benefit from using the breakout trading strategy and reversal trading strategy for trading via the Average Daily Range. Hence, it is crucial that technical traders choose their ATR input from the indicator settings with the utmost diligence. ![]() If the ATR value is low, the ADR value will be calculated with more data. ![]() Hence, the calculation time of the average daily range plays a pivotal role in setting a range. The ADR indicator finds its value with the help of the Average True MetaTrader indicator.
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