Standard Deviation

Standard deviation is a statistical measure of volatility which has applications in the field of technical analysis as a component of other indicators or as a complementor to them rather than as a stand-alone indicator. For example, standard deviation is part of the calculation for Bollinger bands.

A high standard deviation value occurs when the item being analysed (eg. closing price) is changing dramatically. Low standard deviation values result from stable values for the data being observed.

Some analysts feel that major tops are accompanied by high standard deviation as investors struggle with euphoria and fear while major bottoms are calmer as investors have fewer expectations.

• Number of periods to use in calculating the standard deviation
• Value to use as basis for calculation (open, low, high, close, adjusted close)