Disliked{quote} I know you are a ADR junkie, that's why I ask that it might interest you. {quote} I don't take no so easily, I have to know why. Since "ADR means ADR means that by the end of the day the delta (i.e. difference) between the High and Low will be the same as it was the previous day" ? Why can't H4ADRequivalent be to mean "that by the end of the day h4 session the delta (i.e. difference) between the High and Low will be the same as it was the previous day h4session" ? Explain this difference in simple words that my non-trading grandma...Ignored
QuoteDislikedI don't take no so easily, I have to know why.
Seriously -- what other metric in the forex world can you predict in advance? Can you predict the "H1delta" or "H4delta" in advance? No. But you can predict the "D1delta" (i.e. ADR) in advance.
As to why there is an ADR -- well, you can answer that better than me. During the day there are forces that pull the price one way or another, but at the end of the day the system tends toward a fair value or equilibrium. This is why "Envelopes" work -- the distance between the upper and lower bands remains relatively constant. The river may bend up or down, but the river maintains its width.
I guess the reason why ADR works is because there is this concept of a "session". Financial transactions occur at the beginning, middle and end of each session. Our OTC trading is just a small blip in the overall foreign exchange market. At the end of each day large banks and financial institutions close shop and people go home for the evening -- they have tasks to complete during each session and don't leave things hanging. Of course that's an over-simplification, but I suspect there is some truth to it.
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