What is Standard Deviation? How to Calculate Standard Deviation

What is Standard Deviation?

      Standard deviation is used to measure the market volatility. It describes the price fluctuations relative to SMA. If Indicator value is high, the market is unstable, and prices of bars are quite relative to the moving average. If indicator value is low, the market can described as having a low volatility, and prices of bars are quite close to the moving average.

       Standard deviation moving average value is used to calculate Bollinger Bonds and this indicator is mainly used to make up other indicators.

Standard Deviation Calculation:

           StdDev = SQRT (SUM (CLOSE - SMA (CLOSE, N), N)^2)/N

SQRT - square root;
SUM (..., N) - sum within N periods;
SMA (..., N) - simple moving average having the period of N;
N - calculation period.