Post By edacsac
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?
You can't polish a turd.
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
No real reason to use ATR in forex, IMHO.
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!
There are completely valid reasons for using ATR/ADR in forex.
Originally Posted by BrianDuffer
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.
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).
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.
"It is better to remain silent and be thought a fool, than to open your mouth and remove all doubts."