[Stop!Loss] ADR Signal

How it works

The ADR Signal tracks the Average True Range (ATR) on a daily chart, calculating the average distance between daily high and low prices over a specified period, typically 10 days. It generates three key lines: the green ADR level representing the 100% daily range, the red current level showing the day's price movement, and a blue signal level that can be customized to a specific percentage of the daily range.

When the red current level crosses the blue signal level, it indicates the trading instrument has moved a significant portion of its average daily range. This mathematical-statistical approach helps traders identify potential exhaustion points in price movement and anticipate possible reversals or price stops during intraday trading.

Why it may be useful

The ADR Signal provides traders with a quantitative method to assess market volatility and potential price exhaustion, offering insights into the instrument's intraday movement dynamics. By tracking the daily price range, traders can make more informed decisions about entry, exit, and risk management strategies.

This indicator is particularly valuable for managing risk in short-term trading scenarios, allowing traders to recognize when an instrument has potentially depleted its typical daily movement range. It serves as an additional tool to confirm potential reversals and helps traders maintain disciplined approach to trading by providing objective measurements of price movement.

When to explore it

The ADR Signal is most effective for intraday trading, particularly on time frames of H1 and below, where short-term price movements are critical. Traders can use it to identify potential reversal points by observing when the current price movement approaches or exceeds the average daily range.

It is particularly useful in volatile markets where understanding the instrument's typical daily movement can provide a strategic advantage. Traders should combine the ADR Signal with other confirming analysis tools to enhance its reliability and reduce the risk of false signals, making it a complementary tool in a comprehensive trading strategy.

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