1. What is ADR in Forex?

The Average Daily Range (ADR) measures the average trading range of a currency pair over a specified period. It helps traders understand typical price movements and set realistic profit targets and stop-loss levels.

2. How Does the ADR Calculator Work?

The calculator uses the ADR formula:

Where:

• \( High \) — Highest price of the period
• \( Low \) — Lowest price of the period
• \( n \) — Number of days in the period

Explanation: The equation calculates the average range (high minus low) over the specified period and converts it to pips (1 pip = 0.0001 for most pairs).

3. Importance of ADR Calculation

Details: ADR helps traders identify potential trading ranges, set appropriate stop-loss and take-profit levels, and gauge market volatility.

4. Using the Calculator

Tips: Enter the high and low prices in decimal format (e.g., 1.1234) and the period in days. The calculator will output the ADR in pips.

5. Frequently Asked Questions (FAQ)

Q1: What is a good ADR value?
A: ADR varies by currency pair. Major pairs typically have ADRs between 50-120 pips, while exotic pairs may have higher ADRs.

Q2: How many days should I use for ADR calculation?
A: Common periods are 14, 20, or 30 days. Shorter periods react faster to changing volatility while longer periods provide more stable averages.

Q3: How is ADR useful in trading?
A: Traders use ADR to identify overextended moves (when price has moved more than its average range) and to set realistic profit targets.

Q4: Does ADR work for all timeframes?
A: While typically calculated on daily data, ADR can be adapted to other timeframes by adjusting the period parameter.

Q5: How does ADR differ from ATR?
A: ADR uses only daily high-low range, while ATR (Average True Range) considers gaps between periods and can be calculated on any timeframe.