Standard Deviation

Technical Indicator Standard Deviation, StdDev measures market volatility. Indicator defines the size of the price fluctuations relatively to the moving average. For example, if indicator's value is higher a market is considered to be volatile and bars' prices spread relatively to the moving average. If indicator's value is not high a market is defined as low-volatile and bars' prices are close to the moving average.

This indicator is often used as a part of other indicators. During calculations of Bollinger Bands value of the standard deviation is added to its moving average.

Market dynamic lies in the constant alteration of the rapid falls and bursts of activity that is why this indicator is rather simple:

If indicator volume is not big and the market is stable rapid burst of activity is expected.

If indicator volume is big it often shows that activity will go in a backward direction very soon.