GlossaryIntermediate
Standard Deviation (as a Volatility Indicator)
A statistical measure of how dispersed an asset's prices are around their average over a period — the direct input behind Bollinger Bands' width.
Standard deviation, used directly as a price-based volatility indicator, measures how dispersed an asset's prices are around their own average over a set period — a higher standard deviation means prices have varied more widely, and a lower one means they've stayed closer to the average.
It's the direct statistical input behind Bollinger Bands' band width (see Kaavon's "Bollinger Bands" glossary definition), and can also be plotted on its own as a standalone volatility reading. See Kaavon's dedicated Standard Deviation article for the full calculation.
Examples
- Bollinger Bands' width is directly derived from a rolling standard deviation calculation applied to price.
- A rising standard deviation reading means recent prices have become more dispersed around their average, regardless of which direction price is moving.