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Forex Standard Deviation Avg Indicator
Trade indicator signals
The trading Standard Deviation logic is simple: standard deviation always grows on impulses, it does not matter if it's bullish or bearish. If price starts to aspire to the moving average, then market has started either consolidation or a reversal begins. Both options create additional risks, so it's better to move StopLoss closer in open positions, and do not open new positions until a new impulse appears on market.
Considerable serious deviations from average prices should be taken into account, the magnitude of which is estimated in history and is indicated on the Standard Deviation graph with a horizontal line.
Small values of the SD indicator characterize market as passive (flat), that is, it is necessary to wait for a breakthrough in any direction. Line growth means an increase in activity (that is, deviation from the average increases), and faster growth, the stronger subsequent price movement. The rollback of line from maximum values means a decline in volatility (market activity is declining).
The delay characteristic of moving average leads to fact that line of SD indicator shows a decrease in market activity already when the price continues to move confidently in main direction. The value of such signals is small.
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