Average Daily Weekly Monthly Range Dashboard
- Indicatori
- - Md Rashidul Hasan
- Versione: 2.50
ADR, AWR & AMR Indicator: Comprehensive Trading Guide
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Core Concepts
ADR (Average Daily Range)
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Definition: The average distance between daily high and low prices over a specified lookback period (typically 14-20 days)
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Purpose: Measures daily volatility expectations, identifies range-bound versus trending days, sets realistic intraday profit targets
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Key Insight: Markets tend to respect their average volatility - days starting near range extremes often reverse, while days starting near the middle often expand to fill the range
AWR (Average Weekly Range)
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Definition: The average weekly trading range calculated from historical weekly high-low data
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Time Perspective: Captures swing trading volatility, establishes weekly support/resistance zones
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Purpose: Provides context for daily trading - whether current week is expanding or contracting relative to normal volatility
AMR (Average Monthly Range)
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Definition: The average monthly trading range over multiple months (typically 3-6 months)
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Purpose: Identifies long-term volatility patterns, seasonal tendencies, and major institutional trading ranges
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Key Insight: Monthly ranges often contain weekly ranges, which contain daily ranges - creating a fractal volatility structure
Interrelated Nature
The three indicators create a volatility hierarchy:
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AMR sets the broadest context (institutional/tactical)
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AWR provides intermediate context (swing/position trading)
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ADR offers tactical context (day trading/intraday)
Markets often display mean-reverting behavior within these nested volatility bands.
TRADING STRATEGIES & APPLICATIONS
STRATEGY 1: ADR-Based Intraday Mean Reversion
Market Condition: Range-bound markets, low volatility expansion
Setup Criteria:
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Current daily range is less than 50% of ADR by London open
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Price is trading at either the projected ADR high or low zone
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No major economic news scheduled for remainder of day
Entry Triggers:
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Short Entry: Price touches ADR high zone + shows bearish rejection patterns (pin bars, bearish engulfing) + RSI divergence
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Long Entry: Price touches ADR low zone + shows bullish reversal patterns (hammer, bullish engulfing) + momentum divergence
Trade Management:
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Stop Loss: Placed 10-15% beyond ADR extreme (allows for normal overshoot)
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Take Profit 1: 25-30% of ADR (partial profit for mean reversion)
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Take Profit 2: 50% of ADR (full mean reversion target)
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Time Filter: Exit by NY close regardless of outcome
Advanced Filter: Use AWR context - if weekly range is already 80%+ complete, avoid counter-trend ADR trades.
STRATEGY 2: AWR Breakout with ADR Confirmation
Market Condition: Low volatility compression preceding expansion
Setup Criteria:
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Weekly range is less than 60% of AWR by Wednesday
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Price consolidating in middle third of weekly range
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ADR values have been declining for 3+ consecutive days (volatility compression)
Entry Triggers:
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Breakout Long: Price sustains above Monday-Wednesday consolidation high + daily range exceeds 80% of ADR on breakout candle
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Breakout Short: Price sustains below Monday-Wednesday consolidation low + daily range exceeds 80% of ADR on breakout candle
Trade Management:
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Initial Stop: Opposite side of consolidation range
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Take Profit 1: 50% of AWR (measured from breakout point)
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Take Profit 2: 100% of AWR (full weekly range projection)
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Trail Stop: Use parabolic SAR or 20-period EMA after 50% AWR target hit
Confirmation: Breakout direction should align with AMR bias if price is in middle 60% of monthly range.
STRATEGY 3: AMR Boundary Trading with AWR/ADR Filters
Market Condition: Price at monthly extremes, institutional level trading
Setup Criteria:
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Price within top or bottom 15% of AMR
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Weekly range has shown expansion into the extreme (price didn't gap there)
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Daily price action shows hesitation/rejection at the level
Entry Triggers:
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Top Reversal: Bearish weekly candle closing in top AMR zone + daily shows distribution pattern + declining volume on rallies
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Bottom Reversal: Bullish weekly candle closing in bottom AMR zone + daily shows accumulation pattern + increasing volume on declines
Trade Management:
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Stop Loss: Beyond monthly extreme (allows 5-10% overshoot for stops)
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Take Profit 1: AMR midpoint (50% retracement of monthly range)
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Take Profit 2: Opposite AMR extreme (full range reversal)
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Position Size: Reduced by 30-50% (higher volatility at extremes)
Additional Filter: Monitor ADR expansion - reversal often accompanied by above-average daily ranges as stops are triggered.
STRATEGY 4: Volatility Expansion Anticipation
Market Condition: Multiple timeframe range contraction
Setup Criteria:
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ADR values below 70% of 20-period average for 3+ days
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AWR current week range below 70% of AWR by Wednesday
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Price in middle 50% of AMR (no extreme compression)
Trading Approach:
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Preparation Phase: Identify key breakout levels (weekly high/low)
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Positioning: Place resting orders 5-10% beyond consolidation boundaries
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Confirmation: Only enter if breakout candle range exceeds 100% of ADR
Trade Management:
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Initial Stop: Other side of consolidation range
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Take Profit: 1.5x to 2x the width of the consolidation range
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Time Exit: If no expansion occurs by Friday, cancel orders
RISK MANAGEMENT GUIDELINES
Position Sizing Based on Range Volatility:
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Low Volatility Days (ADR < 80% of average):
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Increase position size by 20-30%
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Tighter stops (closer to entry)
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High Volatility Days (ADR > 120% of average):
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Decrease position size by 30-50%
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Wider stops (account for increased noise)
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Extreme Volatility (ADR > 150% of average):
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Consider avoiding new positions
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Focus on managing existing trades
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Time-of-Day Considerations:
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Asian Session: Often achieves 30-40% of ADR
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London Session: Typically adds 40-60% of ADR
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NY Session: Fills remaining range, often with volatility expansion
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Best Trading Times: Overlap periods (London open, NY open) when range completion probability increases
Range Adjustment Factors:
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Trending Markets: ADR expands by 20-40%
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Holiday Periods: ADR contracts by 30-50%
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News Events: ADR can expand 200-300% around major releases
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Friday Trading: Often shows range expansion into close
ADVANCED APPLICATIONS
Inter-Market Analysis:
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Compare ADR across correlated pairs (EURUSD, GBPUSD, AUDUSD)
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When one pair reaches 80% ADR while correlated pair at 40%, anticipate catch-up move
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Use AWR differentials to identify relative strength opportunities
Option Trading Integration:
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ADR informs straddle/strangle pricing for daily expiries
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AWR guides weekly option strategies
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AMR sets context for monthly option positioning
Algorithmic Trading Parameters:
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Use ADR percentage to adjust algorithmic sensitivity
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Incorporate AWR boundaries as profit-taking zones
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Apply AMR extremes as circuit breakers for automated systems
PRACTICAL TIPS FOR IMPLEMENTATION
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Customize Lookback Periods:
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ADR: 14-20 days for day trading, 50-100 days for longer-term context
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AWR: 8-12 weeks for swing trading
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AMR: 3-6 months for position trading
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Adjust for Market Type:
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Forex: Use pips for ADR/AWR/AMR
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Stocks: Use percentage or ATR multiples
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Futures: Use points/ticks
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Combine with Other Indicators:
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Volume profiles at range extremes
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Order flow at ADR boundaries
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Market internals (advance/decline) for context
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Session-Specific Ranges:
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Calculate separate ADR for Asian, London, and NY sessions
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Monitor which session typically provides largest range contribution
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Seasonal Adjustments:
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Summer months typically show 20-30% range contraction
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January and October often show range expansion
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End-of-quarter often exhibits volatility spikes
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The ADR/AWR/AMR framework provides a structured approach to volatility-based trading, offering clear reference points for entries, exits, and risk management across multiple timeframes.
