Standard Deviation
Statistical measure of price dispersion around a mean; rising values indicate increasing volatility, falling values a tightening range.
σ = √(Σ(Pᵢ − P̄)² / n), where P̄ = SMA(n) of close
Standard Deviation as a standalone indicator plots the rolling standard deviation of closing prices over a user-defined period (typically 20). It rises when bars scatter widely around the average, and falls when prices cluster tightly.
Traders watch for SD compression followed by expansion as a volatility breakout signal — analogous to the Bollinger Squeeze. It is the mathematical engine inside Bollinger Bands and feeds into Bollinger Bandwidth. Unlike ATR, standard deviation does not account for gaps between sessions.