VOLATILITY INDICATOR
Standard Deviation
Quantifies the dispersion of recent prices around their average.
Start with the input, not the story.
How widely a chosen price series varies within a rolling window.
Plain-language formula
Square root of average squared distance from the mean, using the platform's chosen convention.
Platform implementations can differ in price input, smoothing, indexing and rounding. Record the exact settings and provider before comparing results.
03 / USEFUL REGIME
Where it may help
Volatility regimes, z-scores and normalised comparisons.
04 / WEAK REGIME
Where it struggles
Non-stationary price levels and distributions with fat tails.
Add a different measurement.
Moving averageReturnsATR
A complementary tool should answer a different question, such as volatility, regime or position risk. Test the base rule before testing the combination.
The shortcut to avoid
Assuming price changes are normally distributed because standard deviation is used.
A testable next step
Apply it to returns as well as price and inspect the empirical distribution.