Average Daily Range (ADR)

#volatility

Average Daily Range (ADR) is a simple volatility indicator.

Default period: 14,9.

The difference between the high and the low of a particular session is the range of that session. When the range is high, the volatility is increased. When the range is low, the volatility is low.

Rising line indicates volatility is rising. Falling line indicates range is contracting. ADR calculates the average range of the instrument over a period defined by the user. ADR above average indicates a high level of volatility. ADR below the average line indicates low volatility.

ADR indicator measures the volatility of the instrument. It is also used for ranking the instrument based on their range levels.

Useful readings:

Above average line: Rising volatility

Below average line: Falling volatility

What makes it unique:

It reads volatility in simple daily range terms any trader can visualize in points. Watching its average line turn is one of the easiest ways to spot a volatility regime change without complex math.

The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.

The indicator is applicable to all types of charting. Calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.

This indicator is also available in the System Builder of RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.