Average daily range as a target guide

[FXS London Scalper]

The average daily range (ADR) gives a sense of the usual distance a pair travels between its daily extremes. It can help with targets.

How to use it:

• Compute ADR over, for example, 20 days.
• During the session, compare today's range so far with ADR.
• If the range has already reached most of ADR by midday, further big moves are less likely, though not impossible.

Worked example: EURUSD ADR at 70 pips. By 11:00 London, the range is 60 pips. A breakout trade targeting 20 more pips would take the day to 80 pips, above average. Possible, but a smaller target may be more realistic.

Limits:

• News days break the average.
• ADR changes over time; recent volatility matters more.

Check with your data: compare hit rates of targets on days when the range was below ADR versus above.

A rolling ADR that ignores the largest day in the window can give a more stable guide, since one data-driven day can distort a 20-day average for a month.

Do you use ADR for targets?