ADR Indicator
Platform: MT4 Type: Market Levels Last update: October 16, 2024The ADR Indicator for MT4 is a forex technical analysis gauge that measures the average daily range of the market for the current day. That way, it helps traders to forecast the take profit and stop-loss levels as well as the support and resistance levels.
That forex indicator plots two lines indicating the high and low daily range.
Understanding the adr
Notably, changes in trade volume and momentum near the upper or lower ADR-level can indicate the beginning of a trend or reversal. ADR values serve as the foundation for many forex technical indicators and are incorporated into various trading strategies.
Beginners can leverage the ADR-levels as support and resistance and keep an eye on price action in these areas. Meanwhile, experienced traders can incorporate the indicator into their existing trading systems. That forex indicator is free to download and easy to install.
How To Read ADR Indiacator?
By default, the ADR indicator calculates the average daily range based on the previous five days’ data. The current ADR is determined using the information from the last five daily candlesticks. However, you can modify this value to fit your strategy, such as setting it to 10 or 15 or any other desired value.
Once the average has been calculated, the ADR plots two lines above and below the current price. These lines serve as indicators that the price will likely remain within them. If the price breaks either the upper or lower line, it indicates that the market volatility is higher than usual, and it may be advisable to stay out of the forex market during such periods.
Since the two lines are drawn by calculating the average, they can be helpful in adjusting your stop loss or take profit levels. For example, based on the intraday chart pattern, you may have set your stop loss above the lower ADR line for a BUY trade. However, by adjusting your stop loss to below the ADR line, you can better protect it.
Trading Tips And Suggestions
Forex traders can leverage the Average Daily Range (ADR) as a tool for implementing two key trading strategies – breakout and reversal. ADR provides a reliable estimate of the market range, allowing traders to better understand the price extremes.
To maximize profits, forex traders can buy when the price is near the lower ADR level and set the stop loss below the last swing low. The upper ADR level is particularly advantageous for taking profits.
Similarly, traders can take a sell position when the price approaches the upper ADR line and watch for signs of a reversal. By utilizing these strategies, traders can increase their chances of success in the forex market.
Settings
These are variables you can customize in the settings window:
Conclusion
The high and low levels of the ADR indicator function as crucial levels in forex trading. The high level signifies overbought conditions, while the low level indicates oversold conditions. Typically, price reversals occur at these levels, and this understanding can help traders generate profits in the foreign exchange market.
It’s a great tool to use in conjunction with other forex indicators. Don’t forget that proper money management is also an important factor that affects your success when using this indicator.
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