What it measures
ADR is the average of daily high-minus-low over a lookback window, usually five, ten or twenty days. It describes how much room the instrument typically gives you in a session.
Using it for targets
If an instrument has already travelled most of its ADR by midday, a fresh breakout entry targeting another full range is fighting the odds. Conversely, an instrument that has covered a quarter of its ADR still has room.
Using it for stops
A stop tighter than a fraction of ADR will be hit by ordinary noise. A common approach is placing stops beyond a structural level that also sits outside typical intraday oscillation.