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Using Three Standard Deviation Channels to Visualize Price Dispersion

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Summary

This indicator plots three standard deviation channels around price and fills the space between them to create a cloud. The channel widths are set at progressively larger multiples of standard deviation, while the lookback length determines how many bars are used in the calculation. Horizontal and vertical shift inputs allow the display to be repositioned.

The document describes the indicator's construction and configuration, but provides no trading rules, market example, or performance evidence. It can help visualize how far price has moved relative to recent dispersion, though the excerpt does not specify the centerline calculation or explain how to interpret touches, breaks, or changes in channel width. Traders would need to define and test those uses separately.

Key ideas

  • The indicator displays three price channels at increasing standard deviation widths.
  • A user-set bar count controls the analysis window.
  • Background filling makes the nested channel regions easier to view.
  • The description supplies no entry rules or evidence that the indicator predicts returns.

Tags

Technical indicatorsStatisticsVolatility

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.