ADR: Average Daily Range
Also known as: ADR, average day range, daily range average, ADR levels
What is it?
Average daily range is the average distance between the daily high and the daily low over a lookback window, usually 5, 10 or 20 days, expressed in pips or points. It answers one practical question: how much room does this instrument typically have in a single day? That number turns into a working expectation for the session.
- Room to run
- Range mostly spent
- Little room left
If GBP/USD has a 20-day ADR of 95 pips and the day has already travelled 88 pips by the New York open, the market has spent most of its typical range — which argues against starting a fresh 60-pip breakout trade and in favour of tighter targets or standing aside. Traders also plot ADR levels: take the day's open, or the current low, and project the full ADR above and below to mark where the day would sit if it delivered an ordinary range. The distinction from ATR is worth holding onto, because the two get used interchangeably and should not be.
ATR uses the true range, which includes any gap between yesterday's close and today's high or low, and it is normally read per bar on whatever timeframe you are on; ADR uses the plain daily high-minus-low and is specifically a daily-session measure. On instruments that gap — stocks, indices, crypto over weekends — ATR reads higher than ADR, and the gap between them is itself informative.
Why it matters: It tells you how much of a typical day's movement is already spent, so you size targets and skip breakouts that have no room left to run.
ADR = average(daily high - daily low) over the last N days, typically N = 5, 10 or 20
It sets realistic intraday targets and flags when a move has already used up the day's normal range.
Real-world example
GBP/USD has a 20-day ADR of 95 pips and has already travelled 88 by the New York open, leaving little room for a fresh 60-pip breakout target.
How SignalBots handles it
SignalBots signals arrive with explicit stop and target distances, so you can check them against the instrument's typical daily range before deciding position size. See /risk-warning.
Pro tip
Recompute ADR when volatility regime changes rather than leaving a fixed 20-day setting — a range averaged across a calm month badly understates room during an active one.
Common pitfalls
Treating ADR as a ceiling and fading any move that exceeds it, when trending and news days routinely run two or three times the average.
Frequently asked questions
What is the difference between ADR and ATR?
ADR averages the plain daily high-minus-low. ATR averages the true range, which also counts any gap from the previous close, and is usually read per bar on any timeframe. On gapping instruments ATR reads higher.
Which lookback should I use?
Five days reacts fast and is noisy; twenty days is stable but slow to register a volatility shift. Many traders watch both, using the short one for today's expectation and the long one for regime context.
How do I use ADR for targets?
Compare your intended target distance to the range still unused today. A target needing 70 pips when only 20 of a 95-pip average remain is asking for an unusually large day, which is a lower-probability bet.
Does ADR work on crypto and indices?
Yes, though express it in points or percent rather than pips. For instruments with weekend or overnight gaps, pair it with ATR, because ADR alone ignores the gap portion of the move entirely.
Can price exceed the average daily range?
Regularly. It is an average, so roughly half of all days exceed it, and news days can run several times over. Never use it as a hard boundary for stops or targets; your capital is at risk. See /risk-warning.
Trading involves substantial risk of loss. Historical and backtested results do not guarantee future performance. Read the full risk warning.
