7
Compatible con

Favoritos:0   Vistas:174   Reseñas:0  

Daily range and average daily range to prospect market volatility and targets

Report Abuse

The Average Daily Range indicator is a great tool that plots the price excursions each session on any timeframe, despite its name suggests an implicit use on a daily timeframe.

The indicator is calculated based on two metrics:

  • Daily Range: the difference between high and low of the current period: (high – low); can be a day, a week, a month, etc…depending on which timeframe the indicator is plotted
  • Average Daily Range: the average of the daily range over a certain amount of periods

The available settings of the indicator are the following:

  • Periods: the number of sessions through which the daily range is calculated. (1 by default) can be unlimited depending on the range (highest high – lowest low of the last x periods) that you decide to analyse
  • AVG: the amount of periods which the average is calculated on (10 by default)

Once plotted, the indicator shows histograms of three colours:

  • Grey: the range of the current periods is somewhere in the average of the last AVG periods (Average range)
  • Blue: the price excursion of the period is above the average of the last AVG periods by at least 25% (Wide range)
  • Pink: the price excursion of the period is below the average of the last AVG periods by at least 35% (Narrow range)

In addition, you are free to add the following lines:

  • AVG Range: the average range of prices over the last AVG periods chosen
  • AVG Wide: the theoretical extended average range of prices over the last AVG periods chosen, which is AVG Range * 1,25
  • AVG Narrow: the theoretical compressed average range of prices over the last AVG periods chosen, which is AVG Range * 0,65

A Wide and extended range typically precedes quieter ranges where we can expect a reduction in price volatility.
Conversely, a narrow and compressed range usually leads to increased volatility where prices could be seeking significant expansion.

Hint: it can be useful to analyse periods of compression to anticipate potential expansion by combining these sets of settings:

  1. AVG 10 PERIODS 1 : 10-average of 1-day ranges
  2. AVG 10 PERIODS 3: 10-average of 3-days ranges
  3. AVG 10 PERIODS 5: 10-average of 5-days ranges
  4. AVG 20 PERIODS 3: 20-average of 3-days ranges
  5. AVG 20 PERIODS 5: 20-average of 5-days ranges

Example: When trading for expansi0n out of a compressed 5-days range, you can set your targets by utilising the AVG Wide line value of the indicator.

 

Valoraciones

No hay valoraciones aún.

Solo los usuarios registrados que hayan comprado este producto pueden hacer una valoración.

Solicitud de información

Your personal data will be used to support your experience throughout this website, to manage access to your account, and for other purposes described in our política de privacidad

Más artículos por onestocktrader

Product Image

How to Prepare for the next trading session

Master the Art of Trading: Learn How to Analyze, Plan, and Execute Successful Trades with ProRealTime

197

0

Product Image

ADR Screener

Scan for compressed or expanded price ranges

27

0

Product Image

Day Type Blueprints

Find and trade opportunities in the market based on specific price setups

17

0

¡Listo para unirse a nuestro mercado trading!
Además de 1,000,000 los clientes potenciales necesitan productos trading de calidad profesional
Únase a nosotros hoy mismo