Quote:
Originally Posted by trading801
ok.. which is usually a better indication?
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Well it all depends on what you’re looking for or for what reason you need this data.
I personally use it to sometimes calculate TPs (I use ½ of the ADR) or SLs (full ADR).
I don’t use it “in” my trading strategies, except to see if today’s range is much higher or lower than usual, but you can see this by simply looking at your charts.
You can also use it to compare pairs to see which has super ranging capacities and which has the lowest. I made a table which includes various data (below) and you can see I’ve put 2 columns for the ADRs. The values for the first were taken last year in July and the second column shows the values 1 year later. So you can compare if pairs have become more volatile (it’s the case for most pairs since last year) or are the same or less.
But to answer you question as to “which is better” it all boils down to either you want (ATR) a straight average which simply averages out the highs and lows or (ADR) an exponential one which puts more emphasis on the recent past than on the far away past, this way maybe better demonstrating what is going on right now (or at least in the recent past).
Happy trading,