Displaying Rolling Standard Deviation as Candles
Summary
This indicator converts rolling standard deviation estimates into candle-shaped plots. It calculates the standard deviation separately for the open, high, low, and close price series over a configurable lookback, then applies a scale factor to the resulting values. Candle color follows whether the underlying price closed higher or lower than on the prior bar. This representation is intended to make changes in measured dispersion easier to compare visually with ordinary price candles.
The document suggests inspecting the indicator on equity indexes and lower timeframes, but it supplies no chart data, formal analysis, or quantified evidence for those observations. Standard deviation is a measure of dispersion, and plotting it as candles does not by itself identify direction or provide entry and exit rules. Users must choose a lookback and scale appropriate to the instrument; the description notes that a particular lookback may fit one index better than others. The indicator is therefore a visualization aid, not a validated volatility forecast or standalone strategy.
Key ideas
- Rolling standard deviations are calculated independently for open, high, low, and close prices.
- A scale input magnifies the plotted values without changing the underlying calculation.
- The indicator uses candle format to show how the dispersion measure changes over time.
- Color reflects the prior price change, not whether standard deviation itself rose or fell.
- The document offers visual observations but no measured evidence or trading rules.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.