HOW TO TRADE FOREX WITH STANDARD DEVIATION INDICATOR

Standard deviation is a very popular forex trading technical indicator, which is primarily used to measure the market volatility. This indicator does not give any signal of entry or exit rather it justify the strength and probability of reversal and continuation of the trend. 

Standard deviation indicator, metatrader4.com

Here in the above image, we can see four parts of the trend. In part one we can see bullish trend with the increase of standard deviation, in second part the trend become slower with the decrease of standard deviation, in third part the trend become bearish with the increase of standard deviation, and finally in fourth part the trend remains bearish with the increase of standard deviation. 

While entering into any forex pair, using other technical tools like MACD or chart patterns, the standard deviation should be considered.When the stander deviation is lower, a strong bullish or bearish break out can be expected. When the standard deviation is higher, the trend may become slower to continue. In case of entry, traders should look for a lower standard deviation. 

Traders can also use the standard deviation indicator to exit the order. When the standard deviation is higher, then the order should be exit, because the trend may slower next and the reversal and continuation are uncertain.