Overview

The Normalized Average True Range (NATR) is a variation of the Average True Range (ATR) indicator. It expresses the ATR as a percentage of the current price, providing a normalized measure of volatility. This makes the indicator more useful for comparing volatility across different instruments with varying price ranges.

Syntax

const period = 14;  // Lookback period for the NATR calculation
const atr = new I.NATR([period]);

Parameters

1. period (Integer):
   • The number of periods over which the ATR is calculated and then normalized.
   • Example: A period of 14 calculates the normalized ATR based on the last 14 data points.

Returns

The NATR object provides a series of values, where each value represents the normalized ATR as a percentage of the corresponding price point. The initial values may be undefined if there are insufficient data points for the specified period.

NATR Calculation

1. True Range (TR):

   The True Range for each period is the greatest of:

   • Current high minus current low.
   • Absolute difference between the current high and the previous close.
   • Absolute difference between the current low and the previous close.

2. Average True Range (ATR):

   ATR is the average of the True Range over the specified period.

3. Normalization:

   NATR is calculated by dividing the ATR by the current price and expressing it as a percentage

Example Usage

Basic Implementation

const period = 14; // Calculate NATR over 14 periods
const natr = new I.NATR([period]);

console.log(natr); // Outputs an array containing NATR values

Displaying NATR on a Chart

Add NATR as an indicator to visualize normalized volatility on a trading chart:

chart.addIndicator(natr, {
    color: "blue",
    label: "NATR(14)"
});

Volatility-Based Strategy

NATR can guide decision-making in volatility-sensitive strategies: