Free Forex Indicator
Close-to-Close Standard Deviations Indicator
We created this indicator to assist traders with describing common trading terms in subjective language. A common feature request that we receive is "Do this when there is a big candle".
This indicator depicts words like big and small as numbers. The computer likes standard units of measurement, making strategies easier to program.
It also gets away from the problem of describing price action in terms of pips. A 20 pip change on the EUR/USD M30 chart represents a move far more important than a 20 pip change on a GBP/JPY M30 chart. Pips are not the same across currency pairs because different charts exhibit different volatilities.
The great thing about standard deviations is that they are easy to interpret, even if the math behind them scares the pants off most traders. Think of them this as a number
- between 0 and 1 is a small change
- between 1 and 1.5 is a noticeable change
- between 1.5 and 2.0 is a fairly large change
- greater than 2.0 is a huge change
The indicator compares the closing price of the current candle to the closing price of the previous bar. The standard deviation informs the trader how much change occurred between each closing price, and whether or not the price went up or down.
