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What is average daily range (ADR)?

In one line: Average daily range is the typical distance between a market's daily high and daily low, averaged over a set number of recent days.

Trading glossary · Updated 2026-10-21

How it's worked out

Take each day's high and subtract its low. That's the day's range. Then average the last few days. Many people use 14 or 20 days.

Here's a 5-day example on a stock:

Total range: $10.00. Divide by 5 days: ADR = $2.00.

In forex the same idea is counted in pips. A pair with an ADR of 80 pips usually travels about 80 pips, high to low, in a day.

Why it matters

ADR is a reality check for your plan.

• Targets. By noon the stock above has moved $1.90 from its low. A day-trade target $1.50 further away would need a much bigger day than usual. Possible, but not typical.
• Stops. A Stop loss of $0.15 is tiny next to a $2.00 normal day. Ordinary noise may reach it.
• Picking markets. ADR shows which markets move a lot and which move a little. That's a quick sense of Volatility.

Then check if the trade still works with the risk-reward calculator.

ADR vs ATR

They're close cousins. ATR (average true range) also counts gaps. If a stock closes at $50 and opens at $53, ATR includes that jump. ADR only looks inside each day's high and low. On markets that gap often, ATR runs bigger.

A common mistake

Treating ADR as a wall. It's an average, not a limit. News days, like a jobs report or an earnings release, can run two or three times the usual range. A market that has "used up" its ADR can keep going.

Questions