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What Is Average Daily Trading Range?

As always we are always trying to give traders the best content, and you are at the right place.

Today’s topic is about average daily trading in the FX market. What that actually means and how it is measured.

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What Is Average Daily Trading Range and How It Can Be Used to Your Benefit?

As recently as 2020 the global forex market saw an average daily trading volume of approximately 6.6 trillion US dollars. That is an incredibly big number and makes the forex market the largest financial market in the world. Now what does that mean for the average daily trading range?

Well, it means that if you add up every single transaction in the global forex market, you will get a number close to 5.1 trillion US dollars over a period of time amounting 365 days. Pretty impressive, right?

Today we can take a little step deeper and explore how you can use the average daily trading range of a specific pair to place your trades. To be more specific, the average daily trading range of a pair or also known as the ADR is simply an indication of how far the price of the currency pair generally moves over a period of 24 hours.

average daily trading range adr displayed over trending market and graph with baxia logo

Why Is the Average Daily Trading Range Valuable to Use?

The reason why average daily trading range is so useful is because it gives you a good indication of how far the pair you are trading will move on a daily basis. Knowing this information can be very helpful to your trading when it comes to either placing your trade and more importantly how to manage them in real time.

Quick example whenever you are day trading. Your analysis finds you a great buying opportunity. The next question should be how many pips of profit I should target. Then, how many pips am I willing to lose on this trade? So, if this pair only moves 30-40 pips a day, then it is unrealistic to target a profit of 100 pips. Also, it would be pointless to set a 100 pip stop loss. Instead you should target a take profit within the ADR of 30-40 pips, increasing your chances of locking in profits.

Taking this a step further, you will want to find those levels of support and resistance within the ADR to more solidify the case of your trade. This combination of ADR and S&R is a good way to find high probability profitable trades.

Now you have read this article, it is time to implement these trading strategies right away. Download your Baxia Markets demo account here and place your first trade using this new strategy. If you have any further questions, we would love it if you reached out to us. We are always happy to have open discussions with all our traders.

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