Standard deviation
Standard deviation, which will be referred to as STDEV, is a basic measure of price volatility that is used in combination with a lot of other technical analysis indicators to improve them. We'll explore that in greater detail in this section.
Standard deviation is a standard measure that is computed by measuring the squared deviation of individual prices from the mean price, and then finding the average of all those squared deviation values. This value is known as variance, and the standard deviation is obtained by taking the square root of the variance. Larger STDEVs are a mark of more volatile markets or larger expected price moves, so trading strategies need to factor that increased volatility into risk estimates and ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Read now
Unlock full access