Standard Deviation

A statistical tool which measures the volatility of prices.

Why should I use it?

The Standard Deviation indicator will tell you in which periods the market is trading with high volatility (price rise or fall sharply), and in which periods the market is trading with relatively low volatility (relatively small changes in price).
Knowing how volatile the market is can be useful in many ways.
For instance: the market is constantly shifting from periods of low volatility to periods of high volatility, therefore, if we observe a long period of low volatility now, we can expect that the price will start moving more considerably very soon.

How does it look like?

The Standard Deviation indicator is a one line indicator which is drawn under your price chart, and can get positive values.

How does it work?

When the Standard Deviation indicator is moving higher, the volatility in the market is increasing.
When the Standard Deviation indicator is moving lower, the volatility in the market is decreasing.
Notice that even when the market is in a down trend and it does so while increasing volatility, the Standard Deviation indicator will go upwards - indicating higher volatility.
This indicator does not take the direction of the market into account.

Example

In the example below the market was trading calmly for a few days, and then around Dec 11 the price started to drop sharply as market conditions turned more volatile. Notice how the Standard Deviation indicator is moving up when volatility kicks in.