Normalized ATR

Volatility

What it measures

NATR is ATR expressed as a percentage of the closing price rather than in raw price units. This solves the same cross-security comparability problem that PPO solves for MACD: a $5 ATR means something very different for a $20 stock than for a $2,000 stock, but a 2% NATR means the same thing regardless of price level, making volatility directly comparable across an entire watchlist or screener universe.

How readings are interpreted

A higher NATR means the security moves a larger percentage of its price on a typical day — more volatile, larger position-sizing risk, larger potential reward. A lower NATR means calmer, more range-bound price action. Because it's normalized, NATR values can be meaningfully ranked and sorted across completely different securities.

Conventional levels

NATR below ~1-2%: relatively low volatility for a typical stock
NATR above ~4-5%: elevated volatility, larger expected daily swings
Rising NATR: volatility expanding, often around news, earnings, or a breakout
Falling NATR: volatility contracting, often preceding a squeeze/breakout setup
Exact thresholds should be calibrated per asset class — crypto and small caps run structurally hotter than large-cap equities

Where it works, and where it does not

Useful in virtually all market conditions since it's purely a volatility measure, not a directional one. Particularly valuable for position sizing and cross-security comparison — raw ATR simply can't do this job as reliably.

Commonly read alongside

ATR: Same underlying calculation; use NATR specifically when comparing volatility across different tickers, use raw ATR for single-ticker stop-loss placement in price units
Bollinger Band Width: Both measure volatility; agreement in direction (both rising/falling) confirms the volatility read
Position sizing: A common practical use — size positions inversely to NATR so each trade carries similar dollar risk

Known limitations

Doesn't indicate direction — high NATR can accompany either a strong rally or a sharp decline
Percentage normalization can make very low-priced stocks look artificially volatile due to bid-ask spread noise relative to price
Historical NATR doesn't guarantee future volatility will remain similar, especially around scheduled events like earnings

In practice

NATR rather than raw ATR is the conventional choice when comparing or screening volatility across multiple tickers
A standard position-sizing approach: risk a fixed dollar amount, with position size inversely proportional to NATR
Screen for low NATR + Squeeze-on as a "coiled spring" watchlist for potential breakout candidates
Expect NATR to spike around earnings and major news — factor this into position sizing ahead of known events

Plot it yourself. Add this indicator to a chart, change every parameter and watch the line move, then backtest how the rule would have behaved on historical data — free on the S&P 500 ETF, no card.

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This is reference material, not advice. It describes what each indicator measures and how its readings are conventionally interpreted. Nothing here is a recommendation to buy or sell anything, and no indicator predicts future prices. GU Analyser is an analytical tool — no money is ever traded here.