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Hello,
As far as I understand from this forum and the third book, there are 2 ways to determine the expected average daily range. Please correct me if I am wrong about anything in this post.
1. Using a simple average of the prior 3 days (does not have to be 3).
2. Using the VIX.
This is what I read in the third book about the VIX on page 439:
"Incidentally, every 16 points in the VIX corresponds to a 1 percent expected average daily range in the S&P 500 index (so a VIX of 32 means that the average daily range of the SPY and Emini is about 2 percent)"
My question is which average daily range calculation does Al and all you traders use? I see they are fairly similar numbers (at least right now) with the simple average being 45.23 points and the VIX calculation being 53.58 points. The point behind this question is, that I just want to start off using the "correct" average daily range.
Replies are very appreciated,
Andreas
Hello,
I use the Ultimate ADR price alerts, which is an Indicator in Trading View. It is free and works on any time frame, and is very accurate. Here are the weekly and daily ATR ranges as produced by this indicator.
Thank you both.
I have decided to go with a 14 day ADR as it was available. I will stick to this to keep the number consistent. 👍
What is average daily range used for
