ADR Indicator
The ADR indicator for MT5 shows the expected market range which acts as SUPPORT and RESISTANCE. The best forex trading strategy for breakouts and reversals.
Description
The ADR indicator for MT5 displays the ADR range and the current day’s market range. Thus, ADR shows the expected market range during the day. Moreover, a change in trading volume and momentum near the upper or lower level of the ADR indicates the beginning of a trend or a reversal. Average Daily Range values form the basis of many other forex technical indicators and are part of many automated trading strategies.
The indicator is best suited for beginners and experienced forex traders. New traders can identify ADR levels as support and resistance and watch the price move around those levels. However, experienced traders can include the indicator in other trading systems. In addition, the indicator is free to download and easy to install.
ADR Indicator For MT5 Trading Setup
The AUDCAD H1 chart above shows the indicator for MT5 in action. The indicator displays the ADR values and the current day’s range in the upper left corner of the chart. In addition, the indicator displays the upper and lower range of the average daily range as a dotted line that continues until the current trading day.
The Average Daily Range MetaTrader indicator gets its values using the ATR – Average True Range MetaTrader indicator. Thus, the calculation period of the average daily range plays an important role in determining the range. A lower ATR value may result in lower Average Daily Range values on historical data. Similarly, a higher value uses big data to calculate ADR values. As such, technical forex traders should carefully select the ATR entry in the indicator settings to adapt to their trading strategy. However, since each currency pair has its own volatility, forex traders should test and apply different ATR settings accordingly.
Forex traders can use the breakout trading strategy and the reversal trading strategy to trade using the average daily range. Because the ADR provides the expected market range, a forex trader can understand price extremes. Thus, forex traders can BUY when the price hits the low of the ADR with a stop loss below the previous swing low. The best take profit for this position is the high ADR level.
Similarly, forex traders can SELL as soon as the price hits the upper ADR line and find reversal signals.
Average Daily Range levels show similar results on intraday charts and act as intraday support and resistance levels. Thus, price action around the ADR’s high or low level gives the trader the best clue as to whether it is a reversal or a breakout.
Conclusion
Forex traders should use the ADR indicator for MT5 with price action or other forex technical indicators. Medium daily range breakout and reversal trading strategies provide the best results. In addition, forex traders can easily download the indicator and install it.