What is average daily range?
Average daily range (ADR) is the typical distance between an instrument's daily high and daily low, averaged over a chosen number of recent days.
In ADR forex use, the range is usually given in pips. A pip is the standard small price step of a currency pair. For indices such as NAS100 or metals such as XAUUSD, ADR is usually given in points or in price units. ADR describes how much price has tended to move in a day. It does not say which direction price will move.
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Formal definition
For each day in the lookback period:
- Daily range = daily high − daily low
ADR is the simple average of those daily ranges: add the ranges and divide by the number of days in the period. Some tools use a weighted or exponential average instead, which gives recent days more weight. Some tools also show ADR as a percentage of price, so instruments with different price levels can be compared.
A worked example (hypothetical)
Take a currency pair over a short lookback period:
- On each day, you take the high, subtract the low, and record the result in pips.
- You add the daily results and divide by the number of days. The answer is the ADR.
- During today's session you compare today's range so far with the ADR. Say today's range is already close to the ADR. This shows the day has been about as active as an average recent day.
That comparison is descriptive only. Price can move beyond the ADR, and on some days it moves far beyond it. You can work out pip values for a range with the tools on the calculators page.
Where the term appears
- Platforms. MetaTrader and similar platforms do not always include a daily range indicator by default. Traders often add a custom ADR indicator that draws the average range on the chart or shows it as a number. See MetaTrader 4 and MetaTrader 5.
- Reports and news. Market commentary may say a pair "traded well above its average range" after a data release or central bank decision.
- Volatility tables. Some sites list average daily ranges by pair. Currency pairs differ a lot in typical range.
Edge cases experienced traders check
- Daily candle boundary. The "day" follows the server time of the data source. Different sources can show different highs, lows and ADR values for the same pair.
- Short sessions. Weekend opening sessions and holidays produce small daily ranges that pull the average down.
- Gaps. ADR ignores gaps between one day's close and the next day's open. Average true range (ATR) includes them, so ATR is usually the better measure when gaps are common.
- Outliers. A single news spike or flash crash can inflate a simple average. This links to fat tails.
- Acronym clash. In equities, ADR also stands for American Depositary Receipt. See ADR and GDR.
Leveraged forex and CFD trading can lose money fast. A typical range is no limit on how far price can move against an open position. See risk management.
Related terms
Frequent questions
What does average daily range mean in simple terms?
It is how far price usually travels from the day's low to the day's high, based on recent days.
Is ADR the same as ATR?
No. ADR uses only the high minus the low. ATR also counts gaps from the previous close.
Does a high ADR mean a pair is better to trade?
No. A high ADR means larger typical moves. That also means larger possible losses.
Why does my ADR differ from another website's?
The sources may use different lookback periods, server times for the daily candle, or averaging methods.