Daryl Guppy's Average Daily Range indicator estimates the potential price range for the next trading day using historical range data with high probability projection.
Explore complementary indicator rolesHow it works
The indicator calculates the average price range from the previous 5 trading days and applies a 0.75 multiplier to project the potential range for the next trading day. By analyzing historical price movements, it statistically estimates the probable daily trading range with an 85% confidence level.
The calculation involves measuring the difference between daily high and low prices, computing their average, and then scaling this value to create a forward-looking range projection. This method allows traders to anticipate potential price movement boundaries without predicting specific directional movement.
Why it may be useful
This indicator provides traders with a statistical framework for understanding potential price volatility and setting realistic expectations for daily market movement. By offering a probabilistic range estimate, it helps traders make more informed decisions about entry, exit, and risk management strategies.
The signal is particularly valuable because it transforms historical price data into a practical, forward-looking tool that can guide trade planning and risk assessment across different markets and timeframes.
When to explore it
The Average Daily Range indicator works best in markets with consistent volatility and clear historical price movement patterns. It is most effective when applied to liquid markets with sufficient trading volume and regular price fluctuations.
Traders should use this indicator as a complementary tool alongside other technical analysis methods, focusing on markets where the projected range closely matches actual daily price movements. It is particularly useful for day traders and scalpers seeking to understand potential intraday price dynamics.
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What we’ve verified
Access, alerts and repainting behaviour have not been independently verified for this indicator. Check the creator’s current publication and settings.
General descriptions and classifications are recovered research. Verified details above identify the specific checks we have completed. Check the creator’s current publication for later changes.
