Standard Deviation

Standard Deviation

Standard deviation is a statistical term that measures volatility. The indicator uses the closing price to measure the dispersion of actual value from the average value. The wider the dispersion (difference between the actual value (e.g. closing price) and the average price (e.g. mean closing price)), the higher the standard deviation will be and the higher the volatility. The narrower the dispersion, the lower will be the standard deviation and the volatility.

Standard deviation is calculated based on the number of periods. The default value is 20 days, which represents the number of trading days in a month. To calculate a 20-period standard deviation:

  1. Take the mean closing price (i.e. average of the 20 closing prices).
  2. Get the difference of the actual closing price and the mean closing price for each period to get the deviation of each period,
  3. Square the deviation of each period.
  4. Get the sum of the squared deviations.
  5. Divide the sum of the squared deviations by the default value of 20.
  6. Take the square root of the quotient in #5 to get the standard deviation.
This entry was posted in Price Indicators. Bookmark the permalink.

7 Responses to Standard Deviation

  1. forex robot says:

    nice post. thanks.

  2. admin says:

    thank you!

  3. Date Hello, I have browsed most of your posts. This post is probably where I got the most useful information for my research. Thanks for posting, maybe we can see more on this. Are you aware of any other websites on this subject

  4. you’ve a terrific blog right here! would you prefer to make some invite posts on my blog?

  5. Spot on with this write-up, I really assume this website wants far more consideration. I’ll probably be again to learn way more, thanks for that info.

  6. Hi there absolutely everyone, This site is interesting and thus is actually that this subject ended up being spelled out. I favor most of the suggestions additionally despite the fact that I recommend most people stick to the niche in order create benefits concise. It’s going to be additionally reassuring to your article author when all of us might promote the idea around (for us who work with social networking say for example delicious, youtube,.. ). Just as before, With thanks..

  7. Hey guys I read the information you posted here and I wanted to encourage Yawl need to continue to add more. It’s extremely fascinating to us readers and I will be back. I will share with my blogging friends. Keep it going!

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>