What is Standard Deviation?
The Standard Deviation indicator plots, in its own pane, how far the closes in a short window typically sit from the average of that same window. When bars cluster tightly around their mean the line is low; when they scatter widely it rises. The result is in price units, so on BTC/USDT it reads in dollars, not as a percentage.
Standard Deviation measures spread. It does not say which way price is moving, whether a trend is strong, or where price will go next. Because it is in price units, its level scales with price and cannot be compared between markets.
How to use Standard Deviation
- Rising line. The closes in the window are spreading further from their own mean, so price has become more active than it was.
- Falling or low line. The closes are bunching together. A long stretch at a low reading marks a quiet market, which often comes before a larger move in either direction.
- Compare it with itself only. A reading of 500 means something very different on a coin priced at 60,000 than on one priced at 2. Read the line against its own recent history on the same chart.
- The link to the bands. The same quantity, put back on the price chart around a moving average, is what sets the width of Bollinger Bands.
These are ways to read volatility, not entry signals on their own.
Settings
| Setting | Default | What it changes |
|---|---|---|
| Length | 5 | Bars in the window. A short window reacts to each new bar; a longer one gives a steadier reading that responds later. Minimum 1. |
| Deviations | 1 | A plain multiplier on the result. At 2 the line reads as the distance from the mean to a band two deviations out. It changes the scale, not the shape. From 0.001 to 50. |
| Source | Close | Which price each bar contributes. Open, high, low and the averaged sources such as hl2 and hlc3 are also available. |
Adjust the window, the multiplier and the price source in the indicator settings.
Calculation
For each bar, the indicator takes the last Length values of the source, finds their mean, and measures how far they sit from it:
mean = (sum of the last 5 closes) / 5
sd = sqrt( sum of (close - mean)^2 / 5 )
plot = Deviations * sdThis is the population deviation: the sum of squares is divided by the number of bars, not by one fewer. With only five bars in the default window that is a real difference, so the reading is a little smaller than a sample deviation of the same data would be.
The line appears once Length bars are available. Nothing is smoothed afterwards, so a single large bar entering or leaving the window moves the reading at once.
Limitations
- It is in price units. The level rises and falls with price itself, so it cannot be compared between markets or across a large move on the same market.
- It has no direction. A sharp rally and a sharp sell-off both push it up.
- A short default window is jumpy. At 5 bars, one outsized candle can dominate the reading until it drops out of the window, and the line then falls just as abruptly.
- The live candle moves. The current bar's value changes until that bar closes.
- It is not a strategy. It describes how much price is moving. It gives no entry, exit, sizing or risk management on its own.
Frequently asked questions
It measures how far the closes in a recent window typically sit from their own average, and plots that distance in a separate pane. A higher reading means price has been spreading out more; a lower one means it has been bunching together.
Read it against its own history on the same chart. A line climbing from a low base shows activity picking up; a line sinking to a low and staying there shows a quiet market. Do not compare its level between markets, because it is measured in price, not percent.
Yes. The indicator declares three inputs: Length, default 5 with a minimum of 1; Deviations, a multiplier with a default of 1, from 0.001 to 50; and Source, default close. Open the indicator's settings on the chart to change them.
No. Each value uses only the bars up to and including that bar, so values on closed bars are not revised. The current candle's reading moves while that candle is live and settles when it closes.
Population. The indicator divides by the number of bars in the window rather than by one fewer, so on the same data it reads slightly lower than a sample standard deviation would.
Use the Add to chart button at the top of this page. It opens BTC/USDT on Binance in the Altrady Charts terminal with the built-in Standard Deviation already applied. On any other market, open the indicator picker on the chart and choose Standard Deviation from the Volatility group.