Lidars have the unique ability to make direct, physical measurements of forest height and vertical structure in much denser canopies than is possible with passive optical or short wavelength radars. However the literature reports a consistent underestimate of tree height when using physically based methods, necessitating empirical corrections. This bias is a result of overestimating the range to the canopy top due to background noise and failing to correctly identify the ground. This paper introduces a method, referred to as "noise tracking", to avoid biases when determining the range to the canopy top. Simulated waveforms, created with Monte-Carlo ray tracing over geometrically explicit forest models, are used to test noise tracking against simple thresholding over a range of forest and system characteristics. It was found that noise tracking almost completely removed the bias in all situations except for very high noise levels and very low (<10%) canopy covers. In all cases noise tracking gave lower errors than simple thresholding and had a lower sensitivity to the initial noise threshold. Finite laser pulses spread out the measured signal, potentially overriding the benefit of noise tracking. In the past laser pulse length has been corrected by adding half that length to the signal start range. This investigation suggests that this is not always appropriate for simple thresholding and that the results for noise tracking were more directly related to pulse length than for simple thresholding. That this effect has not been commented on before may be due to the possible confounding impacts of instrument and survey characteristics inherent in field data. This method should help improve the accuracy of waveform lidar measurements of forests, whether using airborne or spaceborne instruments.