The best way to fly ADF is to;
not read the instrument unless wings are level. You should be targetting a heading anyway.
not to read read any moving instrument.
Big End Bob, I have noticed the same, In particular,high wing aircraft seem to suffer less from dip.
Tracking within 5degrees is very relevant in some of the valleys in Canada where I started my flying. If you try to be within 5deg and get 10deg then not good but OK, but if your limits are 10deg you will get 20deg etc.
ADF is a good instrument because it always shows you where the station is pictorially.
Imagine you are a little aeroplane on a pivot on the tail of the needle always pointing vertically up the instrument panel. The beacon is always in the centre of the instrument.
Just turn in the direction that will push or pull the needle where you want it to go.
Remember also that the needle head always wants to move towards the wind.
I believe that single needle tracking is a good and satisfying skill to posess for situational awareness.