By Islam BarakaDefinitions
In plain terms
It captures both intrabar range and overnight or interbar gaps in one nonnegative measure.
Technical
The calculation requires consecutive finalized bars, aligned adjustment basis, previous close, missing-gap policy, and valid OHLC.
Scope
It is a one-bar range measure and is not Average True Range.
Formula
TR_t = max(H_t-L_t, abs(H_t-C_(t-1)), abs(L_t-C_(t-1)))TR_t=\max(H_t-L_t,|H_t-C_{t-1}|,|L_t-C_{t-1}|)| Symbol | Meaning | Unit |
|---|---|---|
H_t | current high | price |
L_t | current low | price |
C_(t-1) | previous close | price |
Output unit: price
Examples
- A governed lesson calculates or identifies True Range only after its parameters, state, timing, and edge cases are declared.
Common misconceptions
- It is a one-bar range measure and is not Average True Range.
Concept relationships
Prerequisites
Required by
- Directional Movement System
- Wilder Smoothed True Range
- Supertrend
- Average True Range
- Ultimate Oscillator
- Short-Window Buying-Pressure Ratio
- Medium-Window Buying-Pressure Ratio
- Long-Window Buying-Pressure Ratio
- True Range Driver
- True Range First-Bar Policy
- True Range Revision Horizon
- ATR Arithmetic Seed
- Keltner Channels
Where this concept is used
Tutorials planned
These catalogued topics use this concept, but their complete build has not shipped yet.
- D07-F02-A04 Prerequisite
- D07-F02-A08 Prerequisite
- D07-F03-A06 Prerequisite
- D07-F04-A01 Primary
- D07-F04-A02 Prerequisite
Evidence and governance
- TA-Lib Directional Movement Index Implementation TA-Lib · first party technical publication
Supports: preferred label, short definition, technical definition, formula
Limits: Zero-denominator and compatibility behavior can differ from the Fintech Builder package and must be stated explicitly.
- Reviewed by
- fintech-builder-batch-007
- Last reviewed
- 2026-07-27
- Next review
- 2027-07-27
- Record status
- published