Normalised Dynamic Range
Normalised Dynamic Range is an indicator that identifies when an asset is going to trend. It uses the concept of Dynamic Range.
The indicator takes 3 look back periods (Default: 45, 30, 15) and calculates the dynamic range as follows:
Dynamic Range (DR) = Maximum(Close, Look back Period) / Minimum (Close, Look back Period)
This gives the Dynamic Range for a given look back period. Similarly 3 different DRs are calculated for 3 look back periods (Long, Mid and Short). These DRs are averaged to get Average Dynamic Range (ADR)
ADR = (Long DR + Mid DR + Short DR) / 3
Since, the short look back candles are also considered in the Mid and Long look backs, the average is weighted more towards the closer candles.
This ADR, is now normalised over a relative look back period (Default: 10) to generate Normalised Dynamic Range (NDR). The formula for normalising is as follows:
Normalised Dynamic Range (NDR) = ((Current ADR - Minimum(ADR, relative look back) / (Maximum(ADR, relative look back) - Minimum(ADR, relative look back)) * 100
How To Read
Caution
NDR only signals if an asset is trending or not. It does not give the direction of the trend.
The indicator takes 3 look back periods (Default: 45, 30, 15) and calculates the dynamic range as follows:
Dynamic Range (DR) = Maximum(Close, Look back Period) / Minimum (Close, Look back Period)
This gives the Dynamic Range for a given look back period. Similarly 3 different DRs are calculated for 3 look back periods (Long, Mid and Short). These DRs are averaged to get Average Dynamic Range (ADR)
ADR = (Long DR + Mid DR + Short DR) / 3
Since, the short look back candles are also considered in the Mid and Long look backs, the average is weighted more towards the closer candles.
This ADR, is now normalised over a relative look back period (Default: 10) to generate Normalised Dynamic Range (NDR). The formula for normalising is as follows:
Normalised Dynamic Range (NDR) = ((Current ADR - Minimum(ADR, relative look back) / (Maximum(ADR, relative look back) - Minimum(ADR, relative look back)) * 100
How To Read
- When NDR is below 20, the asset is getting into range bound
- When NDR is above 20, the asset is trending
Caution
NDR only signals if an asset is trending or not. It does not give the direction of the trend.