True Range (TR)
Volume Profile Analysis glossary · Auction Theory & Market Profile (TPO)
Definition
The greater of: (a) current bar high minus current bar low, (b) absolute difference between current high and prior close, (c) absolute difference between current low and prior close. The gap-adjusted bar range.
True Range (TR) in plain English
True Range measures how much a price really moved during one bar (one time slice, like an hour or a day), including any overnight jump. A plain high-minus-low misses the gap when the market reopens far from where it closed, so True Range takes the biggest of three distances: today's high-to-low, today's high versus yesterday's close, or today's low versus yesterday's close. It's like measuring how far a hiker traveled in a day — you shouldn't ignore the ground they covered by taking a bus from where they stopped the night before. This gap-aware number is the building block for volatility tools like ATR.
Also called: TR
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