True Range [TR]

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The True Range function determines the volatility of a financial data series by calculating the difference between the True Range High and True Range Low. Parameters ------------------ Close         The closing price of the security for each given day. High          The high price of the security for each given day. Low           The low price of the security for each given day. Note that while this function is intended for use with these specific values, any values can be used for these parameters, including other price values and averaged prices. Indicator Value ------------------------ The True Range is calculated by taking the difference between the True Range High and the True Range Low. The current True Range High is the current high or the previous close, whichever is greater. Similarly, the current True Range Low is the current low or the previous close, whichever is lower. These values take into account price changes during off-hours trading. The True Range at the beginning of the data series is not defined for the first day since it uses the close from the previous day in its calculation. Usage ----------- The True Range measures the volatility of a security. High values indicate that prices are changing a large amount during the day. Low values indicate that prices are staying relatively constant. Note that both trending and level prices can have high or low volatility. The value is typically smoothed with a moving average. For an example of this, see the Average True Range. High volatility levels can sometimes be used to time trend reversals, such as market tops and bottoms. Low volatility levels can sometimes be used to time the beginning of new upward price trends following periods of consolidation. Source ------------ This indicator is based on an entry in "Technical Analysis From A To Z" by Steven B. Achelis. It was introduced by Welles Wilder in his book "New Concepts in Technical Trading Systems".