The true range is used to measure an asset's volatility. To find the true range you take the largest of the following: distance from today’s low to high, distance from yesterday's close to todays high, or distance from yesterday's close to today’s low.

The true range is then smoothed (usually using a 14-period average) by using one of the moving average types, usually an exponential or simple moving average, to give it the average true range.

Calculation:

TR( t ) = MAX( ( H( t ) - L( t ) ), ABS( H( t ) - C( t - 1 ) ), ABS( L( t ) - C( t - 1 ) ) )