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Thread: ADR and ATR

  1. #1
    Join Date
    Jun 2008

    Default ADR and ATR

    I find the ADR useful, but, most platforms only provide ATR. I don't really understand ATR (probably because I'm wanting the ADR).

    Can I somehow use ATR as a substitute for ADR?

    Are there any weights applied to an ADR, or can I just add up how ever many days and divide?

  2. #2
    Shane Guest
    Hi edacsac,

    I am assuming you are talking about Average Daily Range and Average True Range
    As far as I can tell, they are both the same unless you get a 'gap' between candles/bars...then the ATR will be larger.
    Last edited by PipDiddy; 10-04-2008 at 10:48 PM. Reason: Link Violation

  3. #3
    Join Date
    Oct 2008
    No real reason to use ATR in forex, IMHO.

  4. #4
    Most charting packages include ATR and it is useful, although not as an indicator. As people have already said, this just gives you the average range that a currency moves in a day.

    So when is this useful? Its probably most useful for those traders new to the forex world, and sometimes even people that have been in it for a couple years. The reason why I say this, is because if you are trying out a new theory, or strategy, or just starting off trading, you will want to play a currency that has a small ATR. This way price will not move on you and be very volatile. Every currency pair can have high volatility or low volatility so the ATR is useful to know when you want to be cautious in the forex markets.

    Just my two cents Best of luck with your trading this week!

  5. #5
    Join Date
    Mar 2009
    Quote Originally Posted by BrianDuffer View Post
    No real reason to use ATR in forex, IMHO.
    There are completely valid reasons for using ATR/ADR in forex.
    The main reason being you would not want to enter a day trading position when the pair has already reached its ADR value because the movement of price is likely exhausted.

  6. #6
    Join Date
    Mar 2007
    Johannesburg, South Africa.

    ADR, as 'Shane' has noted, does not include the gaps. ATR includes the gaps.

    ATR is a VERY valid indicator for ANY market. ATR is widely used to calculate stop loss values (and your stops therefore are volatility adjusted which is a FAR better method for calculating stop loss values than using the same fixed value all of the time).



  7. #7
    Jason Rogers's Avatar
    Jason Rogers is offline Verified Broker Support and Analyst for FXCM FX-Men Honorary Member
    Join Date
    Jun 2009
    New York
    Many traders use ATR as a filter for market conditions. For example, if you have a ranging strategy, the range signal is invalid if ATR exceeds a certain level and becomes too volatile which may indicate a trend.

  8. #8
    Join Date
    Aug 2015
    ADR is
    the simple moving average of the last 14 highs
    the simple moving average of the last 14 lows

    so if you can plot the simple moving average of the highs and lows period 14 just take yesterday's values
    and subtract MA14H minus MA14L and you will get the ADR for today.

    You can experiement with differnt periods too

    try it !

  9. #9
    Join Date
    Nov 2006
    As some of the folks here mentioned, ATR can still be useful in a variety of aspects. I myself look at it as a sort of benchmark for my stops and targets. For instance, if I'm planning to hold on to a position for a week, I'll make sure my target is somewhere around the pair's ATR for a week.
    "The only cable I watch is the pound baby."

  10. #10
    Join Date
    Apr 2015
    Kona, Hawaii
    Quote Originally Posted by PipDiddy View Post
    if I'm planning to hold on to a position for a week, I'll make sure my target is somewhere around the pair's ATR for a week.
    Hi Pipditty,

    The standard period for the ATR is 14, and I take it that that's the average range for the last 14 days. How would you set the ATR's parameters to find the ATR for a week?

    Last edited by NormanA; 10-28-2016 at 01:51 AM.

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