Lesson 2 - Exploring the Daily Trading Cycles: ADR, ODR, and RDR
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Welcome to Lesson 2…
…of our day trading strategy series. In this lesson, we will delve into the daily trading cycles and focus on three crucial sessions: the ADR (After Defining Range), the ODR (Overnight Defining Range), and the RDR (Regular Defining Range). Understanding the characteristics and relationships between these sessions is crucial for day traders. We will also introduce the concept of defining range and implied defined range. So, let's get started!
The ADR Session (Asian Session): The ADR session, also known as the Asian session, begins at 19:30 New York Time and runs for six and a half hours until 2:00 am. This session marks the start of each day's trading activity. Traders closely analyze price movements during the first hour of the ADR session to identify the defining range, which represents the highest and lowest prices reached within that hour.
The ODR Session (Overnight Session): The ODR session commences at 03:00 am and continues until 08:30 am. This session corresponds to when Asian markets close and European markets start to become active. Traders pay close attention to the first hour of the ODR session to determine the defining range, encompassing the highest and lowest prices attained during that period.
The RDR Session (Regular Session): The RDR session, commonly called the regular session, commences at the New York market, opens at 09:30 am and concludes at 4:00 pm. This session is pivotal for day traders, encompassing peak trading hours, including the New York Stock Exchange (NYSE) opening bell. The first hour of the RDR session, from 09:30 am to 10:10 am, holds significant importance as it establishes the defining range for the day. Traders identify the highest and lowest prices achieved during this hour to define the range.
Defining Range (DR) and Implied Defined Range (IDR): The defining range (DR) is a critical concept in day trading. It represents the highest and lowest prices reached during the first hour of each session (ADR, ODR, and RDR). Traders utilize the defining range to establish essential support and resistance levels and make informed trading decisions based on these price levels.
In addition to the defining range, traders consider the implied defined range (IDR). The IDR is determined by identifying the highest and lowest candle bodies within the defining range. It provides insights into the potential price movement range based on the candle bodies' size.
Next Lesson: Interconnections between Sessions: In the upcoming lesson, we will explore the significant relationships between the ADR, ODR, and RDR sessions. We will analyze how price movements within each session can impact subsequent sessions, enabling us to identify potential trading opportunities based on these interconnections.
Conclusion: In this lesson, we have explored the daily trading cycles, including the ADR, ODR, and RDR sessions. We have learned that during the first hour of each session, traders closely examine price movements to identify the defining range, representing the highest and lowest prices reached within that hour. Additionally, we introduced the concept of the implied defined range (IDR), which considers the highest and lowest candle bodies within the defining range. Understanding these sessions and their defining ranges can provide valuable insights for day traders. In the next lesson, we will examine the interconnections between these sessions and explore their implications for trading strategies.
Disclaimer: Day trading involves significant risks, and conducting thorough research and consulting with financial professionals is crucial before engaging in any trading activities. The information provided in this lesson is for educational purposes only and should not be considered financial or investment advice.
Successful trading requires continuous learning, adaptability, and disciplined risk management. Best of luck with your trading endeavours!