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?
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.
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.
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.
Hi,
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).
Regards,
Dale.
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.
ADR is
the simple moving average of the last 14 highs
minus
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 !
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.
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?
Thanks,
Norm
You just need the weekly chart for that, Norm.
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.
Hope this clarifies it.
“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.”
Thank you, Lexys. Very clear!
Best to ya,
Norm
Hi Dale,
How much difference is there between ADR and ATR readings? Would you say 3%? Less?
Thank you,
Norm
Hi,
I’m looking for an accurate ADR chart or accurate, easy to understand plugin for MT4. Can anyone recommend a good, dependable one?
Thanks,
Norm
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:
Thanks for your kind reply, Lexys.
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
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.
Hello, Norm
Use the [B]ATR.[/B]
[B]1.[/B] Your MT4 platform is showing you the correct ATR in pips.
[B]0.00103 means 10.3 pips.[/B]
[B]2.[/B] There is no holy grail.
Besides, [I]if anyone had a holy grail,[/I] they surely would not post it on the internet.
If you are trying to use Nick B’s system with “everything lined up just right”, then [B]use the number of periods he specifies.[/B]
If he doesn’t specify the number of periods, then use the default 14 periods.
[B]3.[/B] (same answer as #1, above)
.
Hi everyone,
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.
Happy trading,
Norm
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!