ATR measures the average “n” periods (where “n” is the setting you’ve put in, which is 14 in your example) for whatever the periodicity is of the chart you’re looking at.
So if you want to know the average range over a week, averaged out over the last 14 weeks, you’d get that from seeing the ATR indicator set to 14 on the weekly chart. If you wanted to know the average range over a week, averaged out over the last 10 weeks, you’d get that from seeing the ATR indicator set to 10 on the weekly chart. Etc. etc.
It’s the average range for the last 14 [U]days[/U] if it’s a [U]daily[/U] chart. If it’s an [I]hourly[/I] chart, then it’s the average [I]hourly[/I] range over the last 14 hours. And so on.
“ATR measures the average “n” periods (where “n” is the setting you’ve put in, which is 14 in your example) for whatever the periodicity is of the chart you’re looking at.”
Is ATR not available as a standard indicator in MT4, Norm? (Forgive me: I haven’t looked at it for years.)
In [U]Forex[/U], ADR and a [I]daily[/I] ATR are essentially the same thing.
The only difference between ADR and ATR is that ADR includes any gaps and ATR doesn’t; but [U]forex[/U] essentially doesn’t have “gaps”, because it trades 24/5. Apart from the possibility of the Sunday night/Monday morning opening level gapping from the Friday night close, anyway - but that’s very unlikely to be significant, surely?
I don’t see any reason why a daily ATR, measured over a reasonable period to allow for that, should be significantly different from the ADR?
So if it’s the ADR that you’re after, wouldn’t the ATR from the daily chart (presumably already available in MT4 without needing an add-on?) be essentially the same thing?
Apologies indeed if I’m missing your point and have somehow got this wrong, but it’s a little difficult not to wonder whether you might be seeking, here, a solution to a perceived problem that isn’t really a problem at all? :33:
I suspected there wasn’t much difference, but I wanted to make sure. I’m studying Nick Bencino’s system for trading scalp lines, and he provides the formula for calculating take profit and stop loss levels (same distance) as the ADR for the pair divided by four. Before I begin demo-ing with his system, I wanted to get everything lined up just right. That’s just the way I is. You can tell by my impeccable grammar.
One thing I don’t understand about the ATR on MT4 is that it shows ATR levels that I just can’t relate to the chart. E.g., I just opened it up now. The ATR shows a level of 0.00103. I can’t figure out what that means! The lowest price on the chart is waaaaaaaaaaaaaaay above that. How do I translate that into ATR in pips? Therefore, whether I go with an ADR or ATR indicator, I’d prefer one that simply stated the value in pips. Perhaps you or someone else can recommend a trustworthy one.
Another matter: What’s the best period to use? The default is 14, but some indicator programmer said that that doesn’t make sense: He uses 50.
So, who’s got the holy grail in ADR or ATR-in-pips indicator and would like to pass it on to me?
At this point, it seems like I could use ADR or ATR with Nick B’s formula, but
Where is there a trustworthy ADR or ATR indicator in pips, and
What is the “holy grail” on the best period?
Also, how do I translate the ATR readings in MT4 into pips?
Thanks Lexys and anyone else who’d care to jump in,
Norm
They both are a measure of volatility and I think their concept too simple to precisely describe complicate markets we have today. Anyway you can try to use it on demo although it hard to build something advanced with them.
Nick Bencino uses an ADR in his system, and I found a GREAT one at CompassFX | ADR Pro Calculator. It’s a free download, and at the bottom of the page is a graphic link to a great video that explains all its features and uses.
I’ll stick my neck out here, but if I’m not mistaken, I think some of us were under the misconception that the ADR and ATR were virtually the same thing - at least that was my takeaway, perhaps mistakenly; but the ADR and ATR are quite different.
I did quite a bit of net surfing, and according to Shaun Overton, the guy who did the explanatory ATR video for Oanda at How To Use The ATR Indicator In MT4 - ForexNews.com, and according to Jarratt Davis elsewhere, THE ATR MEASURES AVERAGE [U]CANDLE[/U] RANGE, whereas, according to the video by the developer of the ADR I recommended above, THE ADR MEASURES AVERAGE [U]DAILY PRICE[/U] RANGE.
Well, I hope that helps somebody. If I’m wrong I’d be absolutely flabberghasted - but flabberghast me if you must.
Indeed - exactly so. And [U]that’s why they’re the same thing[/U], if you use a daily candle, Norm - as explained above.
You’re not wrong that the ATR measures the candle range and the ADR measures the daily price-range. But you’re wrong in thinking that makes them two different things, Norm: the daily candle-range [B][U]is[/U][/B] the daily price-range, so daily ATR = ADR!
Its a simple concept. Your take profit and stoploss are more dynamic and based on market conditions.
Although if you were manually trading you could just draw a pair of straight lines to determine the market range… You can use it for a particular day, or particular session, etc…
Also use atr for lot size (risk) . Usually there is less risk in a ranging market. (depending on system).
From my own perspective, I find this to be the one of the great advantages of trading from volume bars rather than timed bars. But previously, when trading from timed bars (which I did for many years, however strange the concept seems to me, looking back at it), I always wanted targets and so on to be derived from the volatility, and an ATR is clearly the convenient way of doing that.
Otherwise you can end up treating, for example “5-minute bars around 9.00/10.00 in the morning” as being directly equivalent to “5-minute bars around lunchtime” and/or “5-minute bars late in the afternoon”, whereas in reality, of course, they’re [B]far[/B] from equivalent in terms of market activity.
Certainly.
I’ve never thought of it as “indicator”, really. But I appreciate that it [U]is[/U], at least by common consent, and that all the software manufacturers classify it as one, anyway (which is probably part of the reason everyone else does). :8:
My alias was What Me Forex? I had a face lift as well as a name change, which is why I look different in the photo; but I won’t say I had a gender change, because I didn’t. (Take my word for it.) Hope no one’s upset about that.
Yes, you’re right. The ATR on the daily = the ADR. Perhaps I missed your and others saying or implying that; but as I stated, Nick Bencino uses the ADR, and he recommended using it on 4-hour charts, in which case ATR would not be based on dailies. Perhaps I didn’t clarify.
If you’d like to enlighten me some more on the matter, please take your liberty. Apparently, you’re quite comfortable with all of this while I’m still trying to digest it all - and boy! What a big meal! There’s no end - but I’m going for it.
I call anything an indicator that you can quantify… put into code… lately i am trying to make indicators based on fundamentals to try to break out of the history cycle and limiting chart data. Whether they are useful or not is another thing
BTW… after years of trying i still cant make an indicator for price action haha
Well, I suspect (but might be wrong about this??) that he meant to refer to it as A[B][U]T[/U][/B]R, then? As we’ve agreed, A[B][U]D[/U][/B]R is just a [I]daily[/I] ATR. I’m not aware that there’s any such thing as a “4-hourly A[B][U]D[/U][/B]R”: that would be a contradiction in terms, surely?
I think this is more straightforward than you expected, especially with forex not gapping anyway.
By switching from spot forex to futures, for which volume is available.
I use constant-volume bars. Each bar’s end is defined not by a fixed time interval but by a fixed number of lots/contracts traded since it started. So when volumes are high, the bars are faster, and they’re slower in quieter markets. I find it a very convenient way of “seeing what’s actually going on in the market”. Apart from that, they’re just like any other bars or candles or whatever.
I do exactly the same things trading from constant-volume bars that I did when trading from timed bars. I just find the outcomes more reliable. My win-rates increased when I switched over.
I think they’re an improvement on tick-charts, because tick-charts tell you only the number of transactions, so a 1-lot trade and a 100-lot trade are all the same thing, according to their representations on a tick-chart (but they’re not really, of course).
Yes; I’m sure you’re right - I appreciate that I’m out of step with everyone, by never having thought of ATR as an “indicator”. :8:
Recent posts in this thread have revolved around your efforts to set up The NickB Method.
Specifically, you’re looking for the best source for the ADR that Nick suggests using.
I decided to re-read the relevant portions of Nick’s e-book, written in 2008, which I downloaded several years ago, to refresh my memory on exactly what he said about the ADR.
On page 26, under the heading S+R Line Targets, Nick says:
Picking Targets
Targets vary depending on the pair you are trading. You cannot have the same target on GBP/JPY
that you have on EUR/USD, because EUR/USD moves only about ½ as much. A little trick I have
learned is to figure out the average daily range (ADR) of the pair and divide it by 4. This gives you an
idea on what you should target on a normal S+R line trade. You will probably need to tweak the
target slightly over time, but dividing the ADR by 4 gives you a general idea. To save you time I have
figured out the ADR for you.
Then, he lists the ADR’s for several pairs, but doesn’t describe how he derived the ADR’s.
On his forex4noobs website, Nick graphs the ADR’s for several pairs over 10 years (2006-2015), but again doesn’t say where the data comes from.
His graphs clearly show that the ADR’s fluctuate over time, but he seems to recommend manually adjusting S+R Line Targets when ADR’s are seen to decline, rather than using real-time ADR data in his formula (ADR/4) to make the adjustments automatically. This seems strange given the fact that we know that the ADR is essentially identical to the Daily ATR, which is available as an indicator in daily updated format in almost every trading platform out there.
It seems to me that simplified instructions might go like this:
Add the 14-period Daily ATR indicator to the Daily price chart.
Use the current Daily ATR(14) divided by 4 to calculate (in pips) the S+R Line Targets.
Add the S+R Line Targets to the 4-Hour chart.
For anyone who’s interested, here’s a link to The NickB Method e-book — nickbmethod.pdf (476 KB)
p.s. — your new user-name and avatar are big improvements!
If I place my stop 1 ATR from entry point, and the next candle goes in my favor, should I move my stop the distance equal to the new ATR behind that candle, and so on?
Tools in compaxfx are not free sir. Is there a way I can plot the average daily range expected from the current trading day, week or month using the atr indicator?
I use this tool “Average Daily Range SR” from mql5 market. it calculates the adr for a 14 day period and draws the support and resistance. Prices tends to bounce of these levels. It helped improve my trading. I would be cautions when prices approches theses levels.
I call anything an indicator that you can quantify… put into code… lately i am trying to make indicators based on fundamentals to try to break out of the history cycle and limiting chart data. Whether they are useful or not is another thing 