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EABuilder Pro

Standard Deviation

Standard Deviation

Section titled “Standard Deviation”

Value of the market volatility measurement. This indicator describes the range of price fluctuations relative to Moving Average. If the value is high, the market is volatile, and prices are spread relative to the moving average. If the value is low, the market has low volatility, and prices are close to the moving average.

Using Standard Deviation

Section titled “Using Standard Deviation”

The indicator is commonly used as a component of other indicators. For example, when calculating Bollinger Bands®, the symbol standard deviation value is added to its moving average.

Interpreting the Indicator

Section titled “Interpreting the Indicator”

The indicator helps in understanding the market behavior, which alternates between high trading activity and a slow market. It provides an easy interpretation of market conditions.

Standard Deviation rises when the price moves fast and falls back when the market calms down.

Calculation of Standard Deviation

Section titled “Calculation of Standard Deviation”
StdDev = SQRT(SUM((CLOSE - SMA(CLOSE, N))^2, N) / N)

Where:

  • SMA(CLOSE, N) is the simple moving average of the close price over N bars;
  • SQRT is the square root;
  • N is the indicator period.

Like ATR, the value is expressed in price units, not in pips.