Trend Indicator: Standard Deviation

The standard deviation (SD) indicator measures price variances relative to the moving average (volatility). This indicator is often used as part of more sophisticated indicators (eg, Bollinger Bands).

How to interpret

The rise of the SD line means high volatility and vice versa. Traders should know that periods of activity and lull in the market usually alternate.
 – The rise of the SD line means high volatility because the closing price and the average closing price differ significantly. High SD extremes warn that current activity will soon calm down and be followed by a period of consolidation.
– The fall of the SD line means low volatility (prices are stable). Low end SD can signal a future market move.

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