Have you ever wondered how top traders identify stocks to trade? 

Relative strength is the key.

It tells you which stocks are outperforming (or underperforming) compared to the broader market. 

By focusing on the strongest or weakest stock, you position yourself to be on the right side of momentum and maximize your trading edge.

📈 Stronger stocks = bigger & more certain moves = better trades.

Relative Strength Pro 

tracks the performance of up to 7 stocks compared to a benchmark (like SPY) and uses ATR-based normalization to highlight real strength or weakness. 

This shows you the exactly what stock you need to trade.

How It Works 

📌 Step 1: Selecting the Benchmark & Stocks

• Users can choose a benchmark (default: SPY) and up to 7 stocks for comparison.

• These stocks are then analyzed relative to the benchmark to see which are outperforming or underperforming.

📌 Step 2: Calculating Price Moves

• It calculates the percentage change in price over a user-defined period (length, default: 12 bars).

• This is done for the benchmark as well.

📌 Step 3: Adjusting for Volatility with ATR

• The indicator uses ATR (Average True Range) to normalize movements.

• This adjustment helps compare stocks with different volatility levels fairly.

📌 Step 4: VWAP Confirmation (Optional)

• If enabled, the indicator checks if the stock is above or below VWAP:

  • Above VWAP → Strong Uptrend (Green Label)

  • Below VWAP → Weak Trend (Red Label)

• If VWAP is not used, the colors default to different stock colors.

📌 Step 5: Visualizing the Strength / Weakness

• Plots the ATR-based [real] relative strength values for each stock.

• Baseline (hline at 0): Stocks above this line are outperforming the benchmark, while those below it are underperforming.

• Color-coded labels show real-time RS values next to the latest bar.

How It Helps You Trade Smarter

🔍 Find the strongest stocks instantly – No more guessing. Focus on THE stock that has real momentum.
🚀 Trade with confidence – Avoid weak stocks and ride the trends that matter.
🎯 Perfect for breakout traders, trend followers, and momentum traders – Catch the leaders before they take off.

Ready to Level Up Your Trading?

👉 Get Relative Strength Pro now and start trading with an edge!

Why use ATR instead of just raw price moves?

Great question! 

1.  Volatility Normalization

Different stocks have different volatility profiles. A $5 move in AAPL means something different than a $5 move in TSLA because TSLA is naturally more volatile.

ATR scales price movements relative to the stock’s typical range, allowing for a fair comparison across stocks.

2.  Avoids Bias Toward High-Priced or High-Volatility Stocks

A raw percentage move might make high-volatility stocks look stronger even if their moves are just noise.

ATR-adjusted strength ensures that a small but significant move in a low-volatility stock is valued appropriately.

3.  Accounts for Market Conditions (Expanding vs. Contracting Volatility)

ATR adjusts dynamically to market conditions.

When markets are highly volatile, ATR is higher, meaning only truly strong moves stand out.

In low-volatility markets, even small but consistent moves can be meaningful.

Key Takeaway: ATR Makes Strength Comparison Fair

Using ATR adjusts for each stock’s unique behavior, helping traders spot real relative strength instead of just volatile price swings. It allows for a level playing field between high- and low-volatility stocks, making the indicator a real life cheat code for traders.

Is Relative Strength Pro the best at finding real relative strength?

There are several ways to normalize price movements. While ATR is one of the best for day-trading applications, other methods exist. Some might be better depending on the use case. Let’s break down why ATR is the best for day-traders:

📌 1. ATR Normalization (Used in Relative Strength Pro)

Formula: (Stock % Move / ATR) - (Benchmark % Move / ATR)

Why It's Good:
✅ Adjusts for volatility dynamically
✅ Works well across different stocks with different price ranges
✅ More responsive than other volatility measures (like standard deviation)

When It’s Best:
🔹 Trading strategies where volatility impacts decision-making
🔹 Comparing relative strength in a way that ignores stock price differences

📌 2. Standard Deviation Normalization

Formula: Stock Move / StdDev(Stock)

How It Works:

• • Instead of using ATR, this method divides price movement by its standard deviation over a given period.

  • Standard deviation measures how spread out price movements are over time.

Pros:
✅ Good for statistical analysis (e.g., Z-score normalization)
✅ Helps detect unusual moves relative to past behavior

Cons:
❌ Less responsive to short-term volatility changes than ATR
❌ Can be slow to react in fast-moving markets

When It’s Best:
🔹 Strategies where historical price dispersion matters (e.g., Bollinger Bands)
🔹 Analyzing mean reversion trades

📌 3. Log Returns Normalization

Formula: log(Current Price / Previous Price)

How It Works:

• • Uses logarithms to measure relative price changes.

  • This makes comparisons between stocks independent of price level.

Pros:
✅ Removes bias toward high-priced stocks
✅ Commonly used in quantitative finance for risk modeling

Cons:
❌ Not as intuitive for traders
❌ Doesn’t account for volatility directly (unlike ATR)

When It’s Best:
🔹 Long-term performance analysis
🔹 Risk modeling & portfolio management

📌 4. Price-to-Range Normalization

Formula: (Stock Move / (High - Low))

How It Works:

• • Instead of ATR, it uses the high-low range of the day to normalize price moves.

Pros:
✅ Simpler than ATR
✅ Reacts faster to intraday volatility changes

Cons:
❌ Doesn’t smooth out volatility like ATR
❌ Less stable in choppy markets

When It’s Best:
🔹 Intraday trading strategies
🔹 Breakout trading where the daily range is crucial

📌 5. Relative Volatility Index (RVI) Normalization

• Formula: Stock Move / RVI(Stock)

• How It Works:

  • The RVI measures price movement relative to past volatility.

  • Similar to ATR but momentum-based rather than range-based.

Pros:
✅ Helps detect momentum-driven trends
✅ Smoother than ATR in certain conditions

Cons:
❌ Lags more than ATR in highly volatile markets
❌ Not as widely used in standard trading tools

When It’s Best:
🔹 Momentum-based trend following
🔹 Avoiding whipsaws in choppy markets

So, Is Anything Better Than ATR?

It depends on your goal:
✔ For short-term trading and relative strength: ATR is the best because it adapts quickly to volatility.
✔ For statistical modeling: Standard deviation or log returns might be better.
✔ For intraday breakouts: High-low range normalization could work well.

But ATR is still the most practical for day traders and swing traders because it reacts fast enough to market changes without being too noisy. 🚀