--- title: "Normalized Average True Range: Formula" description: "Normalized Average True Range (NATR) is the Average True Range expressed as a percentage of the close, as implemented in libraries such as TA-Lib. ATR is..." canonical: https://www.getswoopr.com/indicators/volatility/normalized-average-true-range/ source: "Swoopr Investment: https://www.getswoopr.com" --- ## Direct Answer > Normalized Average True Range (NATR) is the Average True Range expressed as a percentage of the close, as implemented in libraries such as TA-Lib. ATR is typically Wilder-smoothed, which makes NATR comparable across price levels. Higher values mean larger typical bar-to-bar moves as a share of price, letting you compare instruments with different price scales. # Normalized Average True Range: Formula, Meaning, Signals, Examples and How to Use It ## How Is Normalized Average True Range Calculated? Normalized Average True Range (NATR) is the Average True Range expressed as a percentage of the close, as implemented in libraries such as TA-Lib. ATR is typically Wilder-smoothed, which makes NATR comparable across price levels. **Formula:** `ATR_t = (ATR_(t-1) x (n - 1) + TR_t) / n; NATR = ATR_t / Close_t x 100` **Inputs:** - True range for the current bar - Previous ATR value - Period n (commonly 14) - Closing price **Worked example.** With a prior ATR of 2.00, a true range of 3.00, n of 14 and a close of 50, the updated ATR is 2.07 and NATR is 4.14%. The inputs are illustrative numbers, not market data. **Reading it.** Higher values mean larger typical bar-to-bar moves as a share of price, letting you compare instruments with different price scales. Rising NATR means volatility is increasing. **Limits.** It is a lagging, smoothed average of ranges that carries no direction. The smoothing method and period change the values, so compare only like with like. ## What is Normalized Average True Range? Normalized Average True Range (NATR) is the Average True Range expressed as a percentage of the close, as implemented in libraries such as TA-Lib. ATR is typically Wilder-smoothed, which makes NATR comparable across price levels. ## How to use Normalized Average True Range Higher values mean larger typical bar-to-bar moves as a share of price, letting you compare instruments with different price scales. Rising NATR means volatility is increasing. A reading alone is never a buy or sell signal; it needs context from price structure, volume, volatility and the broader market regime. ## Strengths - Wilder smoothing of true range includes gaps, and dividing by the close puts the result in percent, so gapping and quiet instruments compare fairly. - The recursive form needs only the prior ATR and the new true range, so it updates with one multiplication per bar. - Reproducible when the formula and data convention are fixed. ## Weaknesses and limitations - The method used to initialize the first ATR varies between libraries, so early values differ even with the same period. - Wilder smoothing gives a decaying weight to every past bar, so one extreme range keeps a small influence on NATR for a long time. - Correlated indicators can create false confidence by repeating the same underlying information. ## Editorial and risk note This page is educational content, not individualized investment advice. It should not imply guaranteed prediction, accuracy or outperformance. ## Frequently Asked Questions Is Normalized Average True Range a buy or sell signal? No. Higher values mean larger typical bar-to-bar moves as a share of price, letting you compare instruments with different price scales. It is a lagging, smoothed average of ranges that carries no direction. A trade built on it still needs a trigger, an invalidation rule, a position size and realistic execution assumptions. What is the best setting for Normalized Average True Range? Normalized Average True Range takes these inputs: true range for the current bar; previous ATR value; period n (commonly 14). There is no universal best setting for the tunable ones, so test them across instruments, regimes and out-of-sample periods and favor stable parameter regions over one historical winner. Can Normalized Average True Range be used by itself? It is a lagging, smoothed average of ranges that carries no direction. The smoothing method and period change the values, so compare only like with like. For that reason it is read next to measures of direction, participation, valuation, liquidity and risk, not alone. Does Normalized Average True Range work on every timeframe? The calculation (ATR_t = (ATR_(t-1) x (n - 1) + TR_t) / n; NATR = ATR_t / Close_t x 100) can be run on any bar size, but behavior is not portable: a reading on a five-minute chart describes a very different market window from the same reading on a daily chart. Validate the exact timeframe before relying on it. Why does Normalized Average True Range give false signals? The method used to initialize the first ATR varies between libraries, so early values differ even with the same period. Wilder smoothing gives a decaying weight to every past bar, so one extreme range keeps a small influence on NATR for a long time. Lag, noise and regime changes add to this, because market participants react to new information after the reading is calculated. How should Normalized Average True Range be backtested? Rebuild Normalized Average True Range from true range for the current bar using point-in-time data, write the rules before testing, include delisted securities where relevant, model realistic fills and costs, reserve a validation sample and compare with a simpler baseline. S Swoopr Editorial Team The Swoopr Editorial Team produces independent investment education, research, and tools for understanding markets, evaluating opportunities, and managing risk. All content is educational only and does not constitute personalized investment advice. See our [editorial policy](https://www.getswoopr.com/legal/editorial-policy/) and [corrections policy](https://www.getswoopr.com/legal/corrections-policy/).