The building block of ATR · shows instantaneous volatility.
The short answer
- What is True Range (True Range)?
- True Range: the largest of three distances for a single candle.
- When is True Range wrong?
- One candle does not make a reading. Its current reading on the platform's symbols, at the latest daily close, is in the "Current reading" table on this page. See its current reading →
Reading now
| Ticker | Value | Five sessions ago | Status |
|---|---|---|---|
| SPY | 6.06 | 6.79 | Equals 0.78% of price |
| QQQ | 8.84 | 9.16 | Equals 1.19% of price |
| IWM | 3.43 | 3.69 | Equals 1.24% of price |
| DIA | 4.95 | 4.95 | Equals 0.96% of price |
A description of where the number sits against its thresholds. It is not an entry or exit signal.
Indicator limit
One candle does not make a reading.
Read it with
Bollinger Bands: one session does not make a reading, and a wider Bollinger band confirms that volatility has changed.
Answers: Where should the stop go?
What it actually does
True Range is the raw building block: the largest of three distances in a single session. High to low, high to yesterday's close, and low to yesterday's close. The last two are what make it "true": it captures the overnight gap that the simple range ignores completely.
Why the gap is part of the move
A stock closes at 100, opens at 95, then moves one dollar. Its simple range is $1 and its true range is $6. Anyone who held the position overnight lived all six, so a measure that ignores the gap misleads everyone who sleeps on a position.
Its place in the chain
Its raw daily value is noisy and is not used directly. It is the input that the average (ATR) and its normalized ratio are built on. Understanding the building block explains how the derivatives behave: a jump in the average after a big gap is not an error but an honest capture of risk that really occurred.
Hypothetical example
Earnings season: a stock gaps up 7% and then trades in a tight range. The simple range says "a quiet session" and the true range says "a high-risk session". The second is the one that should feed the stop and position size for the following sessions.
Where it errs and why
It is less often wrong than misplaced: it is an input, not an indicator, and a single unsmoothed daily reading is no basis for a decision. It carries no direction and does not tell a widening range up from a widening range down.
Read it with
It is not read alone. First classify the environment with the trend strength indicator. Then confirm with volume, which separates a backed move from an empty one. Then place it on the structural levels from the gamma map, since a signal at a dense wall carries more weight than one in open space.
Where to see it on the platform
The technical chart in the members area shows it on any ticker and timeframe, within its full family in the indicator list.
