which price high is used in the ulcer index calculation is determined by adjusting the look back period a 14 day ulcer index measures declines off of the highest point in the past 14 days a 50 day ulcer index measures declines off of the 50 day high a longer look back period provides investors with a more accurate representation of the long term price declines they may face a shorter term look back period provides traders with a gauge of recent volatility 
using the ulcer indexmartin recommends the ulcer index as a measure of risk in various contexts where the standard deviation is usually used the ulcer index can also be charted over time and used as a kind of technical analysis indicator to show stocks going into ulcer forming territory or to compare volatility in different stocks investors can use the ulcer index to compare different investment options a lower average ulcer index means lower drawdown risk compared with an investment with a higher average ui applying a moving average to the ulcer index will show which stocks and funds have lower volatility overall watching for spikes in the ulcer index that are beyond normal can also be used to indicate times of excessive downside risk which investors may wish to avoid by exiting long positions image by sabrina jiang investopedia 2021