📊 TECHNICAL
Standard Deviation
A raw, standalone volatility gauge measuring how far price has dispersed from its average over a lookback period — the same building block used inside Bollinger Bands.
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Live Demo — Standard Deviation applied to NIFTY 50 (illustrative)
PriceEMA(9)EMA(21)SMA(20)
What is Standard Deviation?
Standard Deviation quantifies how much a security's price varies around its own moving average. Plotted alone, it rises when price action becomes erratic and falls when price settles into a tight range — the exact calculation Bollinger Bands use as their scaling factor.
Formula
Mean = SMA(Close, N)
StdDev = sqrt( SUM((Close(i)-Mean)^2) / N )Parameters
| Parameter | Default | Description |
|---|---|---|
| Period (N) | 20 | Lookback window for the mean and dispersion |
| Price Source | Close | Price field used |
Signal Interpretation
- Rising standard deviation indicates expanding volatility.
- Falling standard deviation indicates contracting volatility/consolidation.
- Multi-period lows often precede sharp directional breakouts, similar to a Bollinger squeeze.
- Spikes frequently coincide with news events, earnings, or climactic trend moves.
- No directional bias — only magnitude of movement.
Tips & Best Practices
- Use as an early-warning volatility filter before committing to breakout or mean-reversion strategies.
- Compare to the instrument's own historical range rather than a fixed threshold.
- Use when you want pure volatility magnitude without the price-level context bands provide.