Average Daily Range [ITA]
🟠 OVERVIEW
Average Daily Range draws the range a session is expected to stay inside, yesterday's close plus and minus half the average daily range, and then counts what actually happened. Three numbers sit in the corner: how often price broke the top of the band, how often it broke the bottom, and how often a session stayed inside it from open to close.
Every tool in this category draws this band. It is presented as a boundary. Almost none of them say how often it holds, which is the only thing that makes a boundary worth drawing.
🟠 CONCEPTS
* Average Daily Range - The mean of high minus low across the last N completed days, taken from the daily series so the number is the same on any chart timeframe.
* The Anchor - The previous session's close. The band is centred on it and set before the session opens.
* Upper Edge - The anchor plus half the average range. Lower Edge - the anchor minus it.
* Broken - Price traded through an edge. Not a close beyond it, because a range is broken the moment price leaves it.
* Stayed Inside - The session touched neither edge.
🟠 HOW IT WORKS
At each session open the band is fixed from numbers that were already settled: the previous close and the average of the completed days behind it. It does not move afterwards, and that is deliberate. A level anchored to the session's own high or low is derived from the same bar it is being judged against, so it cannot be wrong, and on a daily chart it collapses entirely: both edges end up tested against the identical high and low and return the identical figure.
When price trades through an edge it is marked once and the session is recorded as having broken it. A session that breaks both is counted in both, and that overlap is itself worth seeing on a symbol that likes to reverse.
When the session closes, one of the three counters moves. Nothing is counted while a session is still running, because a day two hours old has not had its chance yet.
🟠 SETTINGS
* Days In The Average - Fourteen is the usual choice, short enough to follow a change in volatility.
* Band Width - 100% spans one average daily range in total. Raise it to ask a harder question.
* Shade Between Them - The band itself, which is the part of the chart the session is expected to stay inside.
* Edge Thickness - Thin by default, so the shaded band is what the eye catches rather than two stepped outlines.
* Draw The Anchor - Off by default. Useful on symbols that open with a gap.
🟠 NOTES
This works on a daily chart and on an intraday one, and the question is the same in both: a session was handed a range in advance, and it either stayed in it or it did not.
The numbers belong to the symbol and timeframe on screen. An index and a small cap behave nothing alike here, and that is most of the value.
Average Daily Range draws the range a session is expected to stay inside, yesterday's close plus and minus half the average daily range, and then counts what actually happened. Three numbers sit in the corner: how often price broke the top of the band, how often it broke the bottom, and how often a session stayed inside it from open to close.
Every tool in this category draws this band. It is presented as a boundary. Almost none of them say how often it holds, which is the only thing that makes a boundary worth drawing.
🟠 CONCEPTS
* Average Daily Range - The mean of high minus low across the last N completed days, taken from the daily series so the number is the same on any chart timeframe.
* The Anchor - The previous session's close. The band is centred on it and set before the session opens.
* Upper Edge - The anchor plus half the average range. Lower Edge - the anchor minus it.
* Broken - Price traded through an edge. Not a close beyond it, because a range is broken the moment price leaves it.
* Stayed Inside - The session touched neither edge.
🟠 HOW IT WORKS
At each session open the band is fixed from numbers that were already settled: the previous close and the average of the completed days behind it. It does not move afterwards, and that is deliberate. A level anchored to the session's own high or low is derived from the same bar it is being judged against, so it cannot be wrong, and on a daily chart it collapses entirely: both edges end up tested against the identical high and low and return the identical figure.
When price trades through an edge it is marked once and the session is recorded as having broken it. A session that breaks both is counted in both, and that overlap is itself worth seeing on a symbol that likes to reverse.
When the session closes, one of the three counters moves. Nothing is counted while a session is still running, because a day two hours old has not had its chance yet.
🟠 SETTINGS
* Days In The Average - Fourteen is the usual choice, short enough to follow a change in volatility.
* Band Width - 100% spans one average daily range in total. Raise it to ask a harder question.
* Shade Between Them - The band itself, which is the part of the chart the session is expected to stay inside.
* Edge Thickness - Thin by default, so the shaded band is what the eye catches rather than two stepped outlines.
* Draw The Anchor - Off by default. Useful on symbols that open with a gap.
🟠 NOTES
This works on a daily chart and on an intraday one, and the question is the same in both: a session was handed a range in advance, and it either stayed in it or it did not.
The numbers belong to the symbol and timeframe on screen. An index and a small cap behave nothing alike here, and that is most of the value.
Pine Script developer & trader. I build clean indicators - Smart Money Concepts, scanners, risk tools. ITAtradingtools.com
Feragatname
Bilgiler ve yayınlar, TradingView tarafından sağlanan veya onaylanan finansal, yatırım, alım satım veya diğer türden tavsiye veya öneriler anlamına gelmez ve teşkil etmez. Kullanım Koşulları bölümünde daha fazlasını okuyun.
Pine Script developer & trader. I build clean indicators - Smart Money Concepts, scanners, risk tools. ITAtradingtools.com
Feragatname
Bilgiler ve yayınlar, TradingView tarafından sağlanan veya onaylanan finansal, yatırım, alım satım veya diğer türden tavsiye veya öneriler anlamına gelmez ve teşkil etmez. Kullanım Koşulları bölümünde daha fazlasını okuyun.