The Complete

ADR Method
for Premium Members
1
Simple, Accurate Targets
A move worth 1.42,
or $1420 per
contract traded!

Today’s Primary ADR

Bear Target was reached
in Crude Oil at 101.16
Forecasting Targets
The PivotBoss approach to taking profits relies upon forecasting targets
based on average price movement and utilizing actual profit targets.

• Average price movement provides a

price-based method to forecasting
targets

• Trading to high-probability targets

yields consistent results

• Using profit targets allows you to

more easily incorporate risk
management measures

• Trading to profit targets is the

PivotBoss preferred approach
What is The ADR Method?
The ADR Method is a simple, yet powerful, method used for forecasting
targets using average price range in any timeframe.

•Helps you forecast targets with a

high degree of accuracy (>70%!)

•Auto-adjusts to current market

volatility and behavior

•Helps identify targets for any

duration of trade

•Simple; effective - and it works!

Why Use ADR Targets?
Average Daily Range has been used by professionals for years, because
it provides a price-based approach that relies on current price behavior.

• Simple; easy to implement

• Self-adjusts to current volatility
• Helps provide reasonable price range expectations for the
upcoming period of time
• Allows you to easily forecast bull and bear targets,
regardless of timeframe
• Allows you to anticipate market behavior, including
breakouts (expansion) and range markets (compression)
What is ADR?
Average Daily Range (ADR) is calculated by averaging the sum
of the daily ranges over a given period of time.

• Daily range refers to the High minus

the Low of the day, including
extended hours trading

• ADR refers to averaging the daily

ranges over a string of days

• The ADR Method primarily uses a 10-

day average, but other periodicities
can be used

• ATR can be a valid substitute for

ADR, but the targets are oftentimes
a bit wider
Calculating ADR
Numerical Formula: ADR (5)
AVERAGE((H-L), 5) 29.45

Day 1 Day 2 Day 3 Day 4 Day 5 Day 6

44.25 25.75 23.75 27.75 25.75 32.25
Multiple Day Ranges
A Multiple Day Range (MDR) uses the highest high and the lowest low
over a given number of days to identify the range.

• The highest high minus the lowest

low over a given number of days

• The MDR, and its average, is used to

identify great swing targets

• The ADR Method primarily uses a 5-

day calculation, but other
periodicities can be used, like 3, 10,
and 20 day averages
MDR Forecasting
MDRs help temper your expectations for price movement and
provide a price-based method for forecasting reliable targets.

• Provides reliable price extremes for

the upcoming n-number of days

• Regardless of direction, bull and bear

targets give you great approximations
for your trades

• The Method takes into account

abnormally high/low range MDRs,
which allows you to forecast better
targets
Calculating the MDR
The MDR calculation uses a “rolling” method, whereby the oldest day in
the string is dropped when a new day is added.

3DR 1:
1-3
2 3
3DR 2:
2-4
1 4 3DR 3:
3-5
5 7 3DR 4:
4-6
66 3DR 5:
5-7
Calculating Avg MDR
Numerical Formula:
AVERAGE((HHV(3)-LLV(3)), 5)
3DR 1 3DR 2 3DR 3 3DR 4 3DR 5 Avg 3DR (5)
=
26.25 37.00 60.75 57.00 45.50 45.30

FORECASTING WITH MDR

The 5-period average 3-day range of 45.30 indicates that the
price range of the upcoming 3 days should be around 45.30 on
average.

In the actual example above, the price range of the next 3 days
was 46.50.
Forecasting Pro-Style Targets
ADR Daily ADR WEEKLY ADR MONTHLY
TARGETS TARGETS TARGETS
Utilizes average daily Utilizes monthly avg
Utilizes weekly avg range
range to forecast intraday range to forecast 4-week
to forecast 5-day targets
targets targets
•Simple; effective
•Simple; effective •Simple; effective
•Great for swing trading
•Can be used for any style •Great for longer term
and range forecasting
of trading; numerous swing trades
•Price-based; self-adjusts
targets •Price-based; self-adjusts
to current volatility
•Price-based; self-adjusts to current volatility
•Uses average weekly
to current volatility •Great for markets poised
ranges for targets
•Success rates over 80% for expansion
OVERVIEW: Base Calculations

ADR TARGETS
All ADR Targets are based on
percentages of Average Daily
Range.
•50% Target: Compression Target
•75% Target: Primary Target
•100% Target: Secondary Target
•125% Target: Extended Target
ADR Daily Targets
ADR Daily Targets use Average Daily Range to forecast reliable and
accurate targets for each session.

ADR Daily
ADR Daily TARGETS
TARGETS
TGT
Utilizes average daily
range to forecast intraday
targets
•Simple; effective +ADR
•Can be used for any style
of trading; numerous
ONL
targets
•Price-based; self-adjusts
to current volatility
•Success rates over 80%
Base Calculations

PRIMARY SECONDARY
TARGET TARGET
Projects 75% of ADR higher from the Projects 100% of ADR higher from
ONL, and lower from ONH the ONL, and lower from ONH
•Uses 75% of ADR •Uses 100% of ADR
•BULL: ONL + (ADR x .75) •BULL: ONL + ADR
•BEAR: ONH - (ADR x .75) •BEAR: ONH - ADR
•Accuracy of >80% •Accuracy of >50%
•Use as the primary target •Use as a secondary target
•Use 5- or 10-day ADR •Use 5- or 10-day ADR
75% Primary Target
ONH: 102.58

75% Target = ONH - (1.90 x .75)

Primary Target
10-day ADR = 1.90 (75%): 101.16
100% Secondary Target

Secondary Target
(100%): 3244.75

100% Target = Low + ADR (31.75)

10-day ADR = 31.75 Low: 3213

Additional Calculations

COMPRESSION EXTENDED GAP ADJUSTED

TARGET TARGET TARGET
Projects 50% of ADR Projects 125% of ADR Projects 50% of ADR higher
higher from the ONL, higher from the ONL, and and lower from the day’s
and lower from ONH lower from the ONH Open price
•Uses 50% of ADR •Uses 125% of ADR •Uses 50% of ADR
•BULL: ONL + ADR •BULL: ONL + (ADR x 1.25) •BULL: Open + (ADR x .50)
•BEAR: ONH - ADR •BEAR: ONH - (ADR x 1.25) •BEAR: Open - (ADR x .50)
50% Compression Target
10-day ADR = 13.80 Use the compression target:
1. In a trading range market
2. If the prior day’s price range
was much greater than average

1244.20

50% Target = Low + (ADR x .50) Low: 1237.30

125% Extended Target
Extended Target
Use the extended (125%): 1257.20
target when price has
been coiling in the
prior session

Low: 1239.10

10-day ADR = 14.50 125% Target = Low - (14.50 x 1.25)

Gap Adjusted Target
10-day ADR = 141

GA Bull Target = Open + (ADR x .5)

GA Bear Target = Open - (ADR x .5)

When a large gap occurs at the GA Bull (50%): 15108

open, look to use the Gap
Adjusted method for calculating
targets, which uses a 50%
projection from the day’s Open.

Open: 15038
ADR Weekly Targets
ADR Weekly Targets use Average Weekly Range (AWR) to forecast
reliable and accurate targets on a week by week basis.

ADR WEEKLY ADR WEEKLY TARGETS

TARGETS
Utilizes weekly avg range
to forecast 5-day targets
•Simple; effective +AWR
•Great for swing trading
and range forecasting
•Price-based; self-adjusts
WL
to current volatility
•Uses average weekly
ranges for targets
AWR Forecasting
Average Weekly Range helps temper expectations for price range and
provides a price-based method for forecasting targets for the week.
• Use AWR to forecast potential price
extremes for the upcoming week

• Identifying the potential price range

for a given week helps to manage
price range expectations

• Projecting targets from Monday’s

high/low provides solid targets for the
week

• Using a confirmed high or low for the

week helps to pinpoint the best
targets
Base Calculations
The base calculations for forecasting with Average Weekly Range are
consistent with all other ADR Method calculations.

INITIAL Base TARGET

FORECAST
Projects AWR higher and lower from
the prior week’s closing price
•Uses 100% of AWR
•BULL: PWC + AWR
•BEAR: PWC - AWR
•Used to determine range
expectations for the next week
•Average price range suggests that
price should remain within the
projected range during the week
CALCULATIONS
Use the Primary (75%) and
Secondary (100%) calculations for
weekly targets
•Primary [uses 75% of AWR]
• BULL: WL + (AWR x .75)
• BEAR: WH - (AWR x .75)
•Secondary [uses 100% of AWR]
• BULL: WL + AWR
• BEAR: WH - AWR
The Initial Forecast
Bull: PWC + AWR = 38.04
T: $38.04
Bear: PWC - AWR = 34.04

AWR = 2.00

PWC: $36.04

The Initial Forecast is designed to

give you the estimated price range
for the upcoming week B: $34.04
Plotting the Real Targets
N Bull: WL + AWR
NL Bull: WL + (AWR x .75) N: $37.86
NL Bear: WH - (AWR x .75)
N Bear: WH - AWR NL: $37.36

AWR = 2.00
H: $36.37

L: $35.86

NL: $34.87
Use Mon’s H/L to forecast
Weekly targets; update the N: $34.37
targets should a new H/L form
Targets Reached
N Bull: WL + AWR
NL Bull: WL + (AWR x .75) N: $37.86
NL Bear: WH - (AWR x .75)
N Bear: WH - AWR NL: $37.36

AWR = 2.00
H: $36.37

L: $35.86

N: $34.87
Price traded right into our N: $34.37
forecasted bull targets
Initial Forecast Helped
The Initial Forecast gave us a great
starting point for identifying the N: $37.86
week’s potential price range
NL: $37.36

N: $34.87
N: $34.37
ADR Monthly Targets
ADR Monthly Targets use Average Monthly Range (AMR) to forecast
reliable and accurate targets on a month by month basis.

ADR MONTHLY
ADR MONTHLY TARGETS
TARGETS
Utilizes monthly avg
range to forecast 4-week
targets
•Simple; effective +AMR
•Great for longer term
swing trades
•Price-based; self-adjusts ML
to current volatility
•Great for markets poised
for expansion
Base Calculations
The base calculations for forecasting with Average Monthly Range
are consistent with all other ADR Method calculations.

INITIAL Base TARGET

FORECAST
Projects AMR higher and lower from
the prior month’s closing price
•Uses 100% of AMR
•BULL: PMC + AMR
•BEAR: PMC - AMR
•Used to determine range
expectations for the next month
•Average price range suggests that
price should remain within the
projected range during the month
CALCULATIONS
The Primary and Secondary base
calculations are used for targets
•Primary [75% of AMR]
• BULL: ML + (AMR x .75)
• BEAR: MH - (AMR x .75)
•Secondary [100% of AMR]
• BULL: ML + AMR
• BEAR: MH - AMR
The Initial Forecast
Bull: PMC + AMR = 1447.50
Bear: PMC - AMR = 1177.30 1447.50

AMR = 135.10 PMC: 1312.40

The Initial Forecast

projects the AMR higher
and lower from the prior
month’s close price.
1177.30
Plotting the Real Targets
AMR = 135.10

100%: 1417.50
75%: 1383.70

H: 1330.70

L: 1282.40

100%: ML + AMR
75%: ML + (AMR x .75) 75%: 1229.40
75%: MH - (AMR x .75)
100%: MH - AMR 100%: 1195.60
Adjusting Targets
Adjust the targets with a new
monthly high or low
100%: 1406.90
75%: 1373.10

AMR = 135.1 H: 1330.70

L: 1271.80
100%: ML + AMR
75%: ML + (AMR x .75)
75%: 1229.40
75%: MH - (AMR x .75)
100%: MH - AMR 100%: 1195.60
Targets Reached

100%: 1406.90
75%: 1373.10

75%: 1229.40
100%: 1195.60
ADR Swing Targets
ADR Swing Targets use average price movement and multiple-day
ranges in order to forecast reliable and accurate targets.

ADR SWING
ADR SWING TARGETS
TARGETS
TGT
Utilizes multiple-day
ranges to forecast reliable
targets
•Simple; effective +aMDR
•Can be used for any style
of trading and in any
FDL
timeframe
•Price-based; self-adjusts
to current volatility
•Success rates over 70%
Base Calculations
PRIMARY
TARGET
Projects 75% of Avg MDR higher
from the FDL, and lower from FDH
•Uses 75% of Avg MDR
•BULL: FDL + (Avg MDR x .75)
•BEAR: FDH - (Avg MDR x .75)
•Accuracy of ~70%
•Use as the primary target
•Use 3-, 5-, and 10-day ranges
SECONDARY
TARGET
Projects Avg MDR higher from the
FDL, and lower from FDH
•Uses 100% of Avg MDR
•BULL: FDL + Avg MDR
•BEAR: FDH - Avg MDR
•Accuracy of ~45%
•Use as a secondary target
•Use 3-, 5-, and 10-day ranges
100% Secondary Target
The Normal calculation projects the average MDR higher from the
First Day Low (FDL), and lower from the First Day High (FDH).

The Normal calculation projects

SECONDARY 100% of the Avg MDR

TARGET TGT

Projects Avg MDR higher from

the FDL, and lower from FDH
•Uses 100% of Avg MDR +aMDR
•BULL: FDL + Avg MDR
•BEAR: FDH - Avg MDR FDL
•Accuracy of ~45%
•Use as a secondary target Great secondary target, and also helps
•Use 3-, 5-, and 10-day ranges to forecast future price range
100% Swing Target
100% Secondary: FDL + aMDR
100% Secondary: 32.17 + 1.63
Bull: $33.80

L: $32.17

10-day MDR = 1.63

100% Swing Target
100% Secondary: FDL + aMDR
100% Secondary: 105.28 + 4.38

Bull: $109.96

. 58
$ 1 05
try :
En
. 2 8
$ 1 05
L:
7-day MDR = 4.38
75% Primary Target
The Primary calculation projects 75% of average MDR higher from the
First Day Low (FDL), and lower from the First Day High (FDH).

PRIMARY The Primary calculation projects

75% of the Avg MDR
CALCULATION
Projects 75% of Avg MDR TGT
higher from the FDL, and lower
from FDH
+aMDR
•Uses 75% of Avg MDR x .75
•BULL: FDL + (Avg MDR x .75)
•BEAR: FDH - (Avg MDR x .75) FDL
•Accuracy of ~70%
•Use as the primary target Great primary target, with a success rate
•Use 3-, 5-, and 10-day ranges of over 70%
75% Target
75% Primary: FDL + (aMDR x .75)
75% Primary: 32.17 + (1.63 x .75)

NL Bull: $33.39

L: $32.17

10-day MDR = 1.63

75% Target
10-day MDR = 2.90

H: $68.08

Bear: $65.90

75% Primary: FDH - (aMDR x .75)

75% Primary: 68.08 - (2.90 x .75)
ADR Range-Based Setups
ADR Range-Based setups provide a price-based method for determining
when to expect powerful breakouts, or range trading.

RANGE CONTRACTION RANGE EXPANSION

EXPECTED EXPECTED
If the current range is 25%
If the current range is 35% smaller
greater than average, then
than average, then expect a major
expect range contraction in the
breakout opportunity ahead.
day(s) ahead.
Wide Range ADRs
If the current range, whether single day or multi-day, is at least 25%
greater than average, range contraction usually follows.

WIDE ADR The Wide Range ADR setup helps

identify when price may begin a
Signals potential range compression phase
contraction ahead
•Predicts contraction
•Traditionally a 1-, 3- or
5-bar pattern
•The pattern develops
when the current n-bar
range is at least 25%
greater than average
•Can forecast a huge
reduction in price range
Wide ADR
For best results, the Wide ADRs generally
current range should be indicate range contraction
at least 25% greater in the days ahead
than average
Narrow Range ADRs
If the current range, whether single day or multi-day, is at least 35%
smaller than average, expansion usually follows.

NARROW ADR The Narrow Range ADR setup

Signals potential range helps identify when price may be
expansion ahead ripe for a breakout/expansion

•Predicts breakouts
•Traditionally a 1-, 3- or
5-bar pattern
•The pattern develops
when the current n-bar
range is at least 35%
smaller than average
•Can forecast huge price
swings compared to
average
Narrow ADR
Narrow range days lead
For best results, the to expansion days
current range should be
at least 35% smaller
than average
Contact Me!

Frank Ochoa
Author, Educator, Trader
Twitter: @PivotBoss frank@pivotboss.com
Shop: shop.pivotboss.com www.pivotboss.com