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Key Takeaways

Difficulty:Beginner
Reliability:High
Category:volatility
Timeframes:1H, 4H, Daily

Standard Deviation

volatilityšŸ“Š 1H, 4H, Daily

Statistical measure of price dispersion from the mean, indicating volatility levels.

Formula

Code
StdDev = āˆš(Ī£(Price - Mean)Ā² / n)

Detailed Explanation

Standard Deviation measures how spread out prices are from their average.

**Applications:** - Bollinger Band width calculation - Z-score calculations - Risk assessment and position sizing

Parameters

Period
Default: 20
Calculation period

šŸ“ˆ Bullish Signals

Low StdDev often precedes breakouts (consolidation)

šŸ“‰ Bearish Signals

Extreme high StdDev may signal exhaustion

Python Implementation

Standard Deviation calculation

Python
import pandas_ta as ta
df['StdDev'] = ta.stdev(df['close'], length=20)

TradingView Pine Script

Try on TradingView
JavaScript
//@version=5
indicator("Standard Deviation")
stdev = ta.stdev(close, 20)
plot(stdev, "StdDev", color=color.orange)
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MT5 MQL5 Code

C++
int stdev_handle = iStdDev(_Symbol, _Period, 20, 0, MODE_SMA, PRICE_CLOSE);
double stdev[];
CopyBuffer(stdev_handle, 0, 0, 100, stdev);

Python Libraries

pandas-ta
Technical analysis
pip install pandas-ta

Common Mistakes

āœ—Using alone without price context
āœ—Not understanding the statistical meaning

Confirmation Signals

ATR
Bollinger Band width
Volume

Best For

Volatility measurementPosition sizingBreakout anticipation

šŸ’” Pro Tips

  • ā€¢Low volatility often precedes big moves
  • ā€¢Used in Bollinger Bands calculation
  • ā€¢Good for comparing volatility across timeframes
Last updated: December 29, 2024

Educational Disclaimer

This content is for educational purposes only and does not constitute financial or investment advice. Trading involves significant risk and you may lose your capital. Always consult a licensed financial advisor before making investment decisions.

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Frequently Asked Questions

Related Indicators

Bollinger Bands

Consists of a middle band (SMA) and upper/lower bands set at standard deviations from the middle.

Average True Range (ATR)

Measures market volatility by calculating the average range between high and low prices.

Keltner Channels

Volatility-based envelopes using EMA and ATR, similar to Bollinger Bands but smoother.

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