True Range Indicator Explained

True Range (TR) is the unaveraged atom inside ATR: the greatest of (high − low), |high − previous close|, and |low − previous close|. The comparisons against the prior close mean gaps count — a bar that gapped 50 pips and ranged 10 shows its true 60-pip violence.

How It Works

• Max of the three range measures per bar, gap-inclusive.
• No smoothing: every bar's value stands alone.
• ATR is simply the moving average of this series.

How to Trade It

Raw TR catches what averaged ATR smooths away: single shock bars. Use 'TR > 2× ATR' to detect event bars (skip entries, tighten stops), or require modest TR on entry bars so you don't buy the middle of a panic candle.

Building It in Setup.Cash

Add True Range in the strategy builder — the length input controls its sensitivity — and use its value in any entry, exit, or filter condition. You can also combine it with other tools in the Indicators Lab or via the AI indicator generator. See ATR for the averaged workhorse. For the full category overview, see the volatility & statistics library guide.

Volatility indicators qualify trades rather than generate them — backtest your system with and without this filter and compare the drawdowns.