Description

• The Standard Deviation is used in statistics to measure the variability or dispersion of a data set
• In technical analysis, this indicator is applied to the closing price of the bar to measure the dispersion of values about the average closing price

Interpretation

• The greater the dispersion i.e. the difference between the closing and the average prices, the higher will be the standard deviation and the volatility
• The smaller the dispersion i.e. the closer the closing prices are to the average price, the smaller will be the standard deviation and the lower the security's price volatility

For eg. A slope rises when it is above 20-day SMA and falls when it is below it

Default Parameters Used/Inputs

• Data Line 1
• Data Line 2
• Bars

Returns/Output

Modified Standard deviation values of the stock for specified number of bars

Formula

σ = €(√X-X)2 /n-1