(1) How to use ADR? I use ADR to gauge my entry and exit. In general, you might use an ADR to judge whether or not you should take a trade. For instance, If you’re considering a trade with a take profit 5 points away, but the average daily range will be hit in only 1 point (Cont)

(2) (in the same direction of your trade), you may decide to skip that trade or adjust your stop loss to breakeven earlier than usual. Similarly, once the average daily range is hit, reversal trades are more likely to be successful. (Cont..)

(3) Also, some traders increase or decrease their stop losses and take profits based on the ADR. For instance, you probably wouldn’t want to use a 1 point take profit on a stock that has a 5 average daily range.

(4) Example: $NIO has an ADR of $2.36. Which would give a better entry A or B? If the price is at B, I personally would not take the day trade because it will only take 43 cents to hit the upper ATR (unless your position size is huge)

(4) Patience pays off. I usually wait for the price to hit the ADR and watch closely for any sign of reversal. $FB broke below the lower ADR (Yellow dots - See chart below). A Hammer candle formed, crossed the lower ADR, which now becomes support, and took off.

(5) Same $FB chart - Price hit the upper ADR. Watch for a reversal on a small time frame (5 min) and go short. I see 2-1-2 $Strat scenario that supports my short position. Price bounced off the VWAP (pink dashed line). I personally will always exit at the VWAP.