Standard Deviation

Standard Deviation computes the standard deviation of a selected price source over a lookback window and plots it as a single line, quantifying how far prices deviate from their mean so traders can watch volatility expand and contract directly. Defaults are a length of 20 on the closing price. This is the plain statistical measure in its raw form — no bands, no smoothing, no overlays — and that austerity is the appeal: the line rises when moves get larger, falls when the market tightens, nothing else.

How to Trade the Standard Deviation?

• Rising line: dispersion is expanding; bars are traveling farther from their recent mean, the signature of an active or trending tape.
• Falling line: contraction; price is coiling around its average and the market is going quiet.
• Extreme low readings: compression phases that squeeze-style traders monitor as the base conditions from which expansions are anticipated.
• Extreme high readings: dispersion at its widest, typical of climactic sessions, news shocks, or capitulation bars.
• No directional content: the line is unsigned — identical readings can accompany a surge or a collapse, so direction must come from another tool.

Because the value is denominated in price units, its absolute size scales with the instrument's price level; compare readings against the same symbol's own history rather than across markets.

Standard Deviation Settings

• Length (default 20): the number of bars used to compute the standard deviation. Shorter windows react quickly to a single large bar and fade just as fast; longer windows describe the prevailing volatility regime.
• Source (default close): the price series the standard deviation is calculated on.

Frequently Asked Questions

How is Standard Deviation different from ATR?

ATR averages bar ranges, gaps included, so it measures how large a typical bar is. Standard deviation measures how widely the source values scatter around their own mean, so a market stair-stepping steadily in one direction can show modest deviation despite decent bar sizes.

How does this relate to Bollinger Bands?

Bollinger Bands are a moving average plus and minus a multiple of exactly this measure, over the same customary 20-period window. Plotting the raw line is effectively plotting the bands' width driver on its own scale — a direct view of compression and expansion instead of inferring them from band shape.

Does a high reading tell me which way price is going?

No. Standard deviation is unsigned, so a spike says only that prices are scattering widely — equally consistent with a breakout, a breakdown, or violent chop. Pair it with a directional read and treat the volatility line as context for sizing rather than as a signal source.