True Range Indicator

True Range was introduced by J. Welles Wilder in his book New Concepts in Technical Trading Systems. It measures the daily range plus any gap from the closing price of the preceding day.

True Range Formula

True Range is calculated as the greater of:

  • High for the period less the Low for the period.
  • High for the period less the Close for the previous period.
  • Close for the previous period and the Low for the current period.

Basically, the Close for the previous period is substituted for the current Low, if lower, or for the current High, if higher.

True Range Calculation

Indicator Setup

The default True Range indicator is normally set to Daily. Weekly or Monthly are of limited use.

See Indicator Panel for directions on how to set up an indicator.

Colin Twiggs

Author: Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.

He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.