# True Range

The highest True High and lowest True Low prices, or the difference between them, for a bar or any other given interval. True Range accounts for gaps between bars when calculating range.

Welles Wilder, in his book New Concepts in Technical Trading Systems, developed and uses a value called True Range, which is used when calculating directional market movement, volatility and other analysis techniques. Mr. Wilder defines range as the distance a price moves per increment of time. For example, from the highest price to the lowest price in a trading day. Because a market sometimes trades at the same price for the day, he created a True Range value in order to establish a more realistic method of calculating price range. True Range is calculated using True High and True Low values. They represent the price as follow:

• True High - Today's high, or the previous close, whichever is higher
• True Low - Today's low, or the previous close, whichever is lower
• True Range - True High - True Low

In most cases, the formulas used in analysis techniques consider more than one day's True Range value in their calculation.

True values provide a more precise method of calculating price movement within a market. They can also be used in place of variables as a base for relative highs and lows.

A relative high is a high that is higher than the highest high of x number of preceding bars. A relative low is a low that is lower than the lowest low of x number of preceding bars, where x is a user-defined value.