Community Forex Questions
What is the difference between average daily range and average true range?
The average true range examines how much an underlying asset's price moves in a given time frame and whether there are price gaps. The calculation of the average daily range (ADR) differs slightly. The ADR calculates the average daily price range while ignoring price gaps.
The Average Daily Range (ADR) and Average True Range (ATR) are indicators used in trading to measure market volatility, but they differ in calculation and purpose.
ADR represents the difference between the high and low prices of a trading session, averaged over a specified period, typically 5-20 days. It focuses on price movement within regular market hours and is useful for estimating daily price targets or setting intraday strategies.
ATR, however, considers the true range, which accounts for gaps and overnight price movements. It is calculated as the greatest of three values: the current high minus low, the previous close minus the current high, or the previous close minus the current low. ATR is broader and often used to assess overall market volatility for stop-loss placement or risk management.
ADR represents the difference between the high and low prices of a trading session, averaged over a specified period, typically 5-20 days. It focuses on price movement within regular market hours and is useful for estimating daily price targets or setting intraday strategies.
ATR, however, considers the true range, which accounts for gaps and overnight price movements. It is calculated as the greatest of three values: the current high minus low, the previous close minus the current high, or the previous close minus the current low. ATR is broader and often used to assess overall market volatility for stop-loss placement or risk management.
Curaidondial50
Dec 20, 2024 10:07
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Nov 25, 2022 07:14