The 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.
Sounds good? Let’s take a closer look at it and bring some practical trading examples.
Introducing the ADR Indicator
MT4 Indicator Overview
The download link of the ADR MT4 indicator is placed at the bottom of this post. Once you’re done, your trading chart should look similar to the example below.
As you can see, that forex indicator plots two lines indicating the high and low daily range.
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.
These are variables you can customize in the settings window:
How to set up the ADR indicator in MetaTrader (MT4)?
Download the adr-indicator.rar archive at the bottom of this post, unpack it, then copy and paste the adr-indicator.ex4 or adr-indicator.mq4 indicator files into the MQL4 folder of the Metatrader 4 trading platform.
You can gain access to this folder by clicking the top menu options, which goes as follows:
File > Open Data Folder > MQL4 > Indicators (paste here).
Now go to the left side of your MT4 terminal. In the Navigator find the gauge name, right-click it and select Attach to the chart.
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.
Download Free Forex ADR MT4 Indicator
To download the ADR Indicator for Metatrader 4 (MT4) for free just click the button below: