The standard Deviation indicator shows you stock volatility. Whenever stock price fluctuates too much, this indictor will on the top side. If the market is less volatile, this indicator will be on the lower side.
Stock price changing with the standard deviation indicator gives lots of information about the possibility of stock movement. Either buy or sell. It depends on stock prices and stock price behavior.
Standard deviation indicator Setting
Let’s discuss all options:
- Period: No of periods. Selected no of periods Calculation line will appear in this indicator. Periods means no of the candle. If you set a 1-day candle. Then the period will equal today.
- Field: The default setting is ‘close’. This means for the calculation of this indicator stock ‘closing’ price will take to calculate. Click on close here all options list will drop down ( close, open, high, low Etc, etc. You can choose any of the prices. But generally, closing price tells lot’s about share. That’s why most traders use closing prices for calculation.
- Standard deviations: you can use 2 multiple with standard deviation. The default setting is good.
- Moving average: this means how the standard deviation line formed by Simple moving average or exponential moving average also many types of moving averages available.
- Result: this is the Standard deviation line color. By default black but you can change this color.
Standard Deviation Indicator Trading strategy
- If share price sticks to the top side and this indicator also increasing then share price can gain or fall.
- If share price sticks to topside for the long term and also standard deviation indicator stable .then it may be stock support zone for stock. Then the stock price is waiting to gain more.
- If the share price sticks to the lower side for the long term and this indicator also stable on the lower side. Then share can be waiting to fall more.
- if share price on the top side and this indicator fluctuate too much then share price can go upside or downside.
Conclusion
standard Deviation indicator is used to show stock volatility. It will rise up in the volatile market means when the share price is fluctuating more. and fall down in the less volatile market.
*Read Related Post For More information.