Visible Range Mean Deviation Histogram

This trading indicator script offers traders a powerful tool to visualize price distributions on a chart through a histogram, calculated using the mean and standard deviation of visible price values. Unlike traditional histogram calculations where price values within each bin are simply counted, this indicator employs bin counting relative to high/low prices. The result is a smoother and more refined histogram that provides a clearer depiction of price distributions.

Key Settings Overview

• Bins Per Side: This setting allows you to define the number of bins located above and below the price mean. Adjusting this setting helps tailor the histogram to your specific trading strategy, offering a customizable perspective on price distribution.
• Deviation Multiplier: This is a critical setting that controls the standard deviation multiplier, adjusting the scale of the histogram to better align with market volatility.

Style Adjustments

• Relative: This option enables the bins' length to be relative to the maximum bin count. Traders can fine-tune the width settings to the left, ensuring the histogram style matches their preferences.
• Bin Colors: Easily customize the appearance of bin and Point of Control (POC) lines by selecting preferred colors.
• Show POCs: Enable this setting to display Points of Control, which can serve as key market levels in your trading strategy.

How to Trade the Histogram from Mean and Standard Deviation Indicator?

Histograms play a vital role in estimating the distribution of a series of price observations, crucial for technical analysis. Constructed by considering the entire price range, they help identify potential support and resistance levels.

This histogram calculates N intervals both above and below the mean of visible prices, where each interval's size is determined by σ × Mult / N. Here, σ represents the standard deviation, and N is the number of bins per side as defined by you, the trader. On the left of each bin, standard deviation multipliers are highlighted for easy reference.

Higher bin counts indicate more price observations within a specific interval, making these areas noteworthy for identifying ranging market zones. This can aid in pinpointing zones where price is likely to consolidate or reverse, providing an edge in your trading strategy.

Why Focus on Points of Control (POCs)?

POCs stand out as they highlight the most significant bins within the histogram. Traders use POCs as potential support and resistance areas, considering them crucial for market entry and exit decisions.

FAQ

How do I access the Histogram from Mean and Standard Deviation Indicator? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.

What is the purpose of adjusting the Bins Per Side? The Bins Per Side setting allows traders to fine-tune the level of detail in the histogram, which is crucial for identifying specific market conditions and tailoring analysis to one’s strategy.

Why use a standard deviation multiplier in this indicator? Using a standard deviation multiplier allows the histogram to scale appropriately with market volatility, ensuring that the analysis remains relevant under various market conditions.