What Is the Standard Deviation Indicator?

By Easy Trade في Jul 24, 2026

The standard deviation indicator is one of the most useful forex indicators. It measures the full size of a price move and estimates how much volatility may occur in the future, helping traders gauge whether price is likely to rise or fall. It is one of the most widely used indicators on MetaTrader and other trading platforms.

The indicator compares historical price movement with current price movement. On the chart, the standard deviation indicator appears as a blue line that moves up and down, showing whether the previous price move was larger or smaller than today’s move.

When the line is rising, it signals a significant change in price, but in most cases this is also an early sign that price volatility may soon decrease.

Bullish Standard Deviation

This reading appears after a large price move, when a big standard deviation occurs and price moves well away from the most recent candles. The shaded area on the chart shows price moving higher compared with the simple candles that came before it, and this is what the standard deviation indicator highlights — you can see the deviation line rising during this move.

Bearish Standard Deviation

When the standard deviation indicator is falling, the most common and expected outcome is that price will stay relatively stable. This signals that the market has no clear direction: the reading may look bearish even though volatility could pick up again soon.

On the chart, once the indicator reading turns bearish and is followed by a large price move, price travels away from that point and extends to the edge of the green-shaded area. During this period the blue line stays in a downward position.

The chart also shows price sitting in a remote area, which is exactly what the indicator measures: the blue line falls toward the back of the green zone, price then moves further down into that remote area compared with the recent past, and the blue line rises again during this later stage.

Standard Deviation Indicator Settings

The indicator’s setting is the number of periods over which it calculates deviation, and the default is approximately 20 — meaning the indicator is calculated over the past 20 days. Setting the period above 20 makes the indicator less sensitive, while setting it below 20 makes it much more sensitive. For this reason, a middle setting tends to work best.

Raising and Lowering the Settings

On the chart, raising the period to 40 changes the readings: at a setting of 40 the indicator becomes smoother, which produces readings that are either very large or very small, and the same applies in reverse. Lowering the number of periods also changes the indicator’s readings — for example, setting the period to 10.

This causes the deviation line to reach very high or very low levels most of the time, which creates many more trading opportunities. Unfortunately, this also comes with more false signals for both downward and upward volatility. In general, most traders prefer to keep the setting at 20, since it produces a solid, reliable reading across most other settings.

If you want to test different settings for the indicator, it is important to first confirm whether the change makes the reading more or less reliable.

Indicator Properties

The standard deviation indicator works well when applied to instruments that show large or normal volatility, and it is also used on trend charts to identify the moment when price leaves a level and begins forming a new trend.

It is generally preferred for currency pairs, where it performs much better than on commodities or stocks, since the forex market is prone to sharp directional swings and large corrections, while the stock market tends to be more balanced and calmer.

Most of the time the indicator moves within a horizontal range near its lows, and it rarely reaches a horizontal plateau at extreme levels — when it does approach the highs, the price action tends to move in a wave-like pattern.

Advantages and Disadvantages of the Indicator

One major advantage is how easy it is to read: the higher the indicator’s value climbs, the greater the price volatility. As for the drawbacks, there are several, and the most important is lag — the blue line can leave price at a flat level while the indicator is still signalling volatility.

Another drawback is that the direction of the move is not clear: while the deviation line is rising and price deviation is increasing, that deviation could be either upward or downward.

Trading decisions are usually built around the rate at which price overcomes resistance or the level of volatility, which is why the standard deviation reading is used less often on its own in trading platforms. Even so, it can be combined with directional indicators to confirm a signal.

Conclusions:

The standard deviation indicator measures the volatility of an asset’s price to estimate the size of future moves.
The standard deviation indicator appears on charts as a blue line.
A high reading on the standard deviation indicator usually means a significant price change has occurred, but this may be followed by a decrease in volatility soon after.
A low reading on the standard deviation indicator usually means price volatility has recently been low, but this can be followed by a large price move soon after.
The standard deviation indicator only helps forecast the size of coming price moves, not their direction.
The standard setting for the standard deviation indicator is 20, meaning it calculates price deviation over the most recent 20 periods.
Using a setting higher than 20 makes the standard deviation indicator less sensitive.
Using a setting lower than 20 makes the standard deviation indicator more sensitive.
The standard setting of 20 for the standard deviation indicator is considered the most reliable and is what most traders keep it at.

Read more:

Best real-time scalping indicators

Top 4 technical trading indicators for simplifying the trading process

Traders who want to see how the standard deviation indicator behaves on a live chart can test it on a demo account first. [AFF-CTA: pending]

Disclaimer: This article is for educational purposes only and does not constitute investment advice or a recommendation to trade. Trading forex and CFDs involves significant risk, and leverage can magnify both gains and losses; most retail investor accounts lose money when trading CFDs. Always test any indicator on a demo account before using it with real funds, and consult a licensed financial advisor if you are unsure about your trading decisions. This page may contain affiliate links, and Easy Trade Web may earn a commission if you open an account through them, at no extra cost to you.