Categories: Formula

Formula for Standard Deviation in Forex Trading: An Academic Guide

The formula for standard deviation in Forex allows traders to measure the volatility of a currency pair. This can provide valuable insights into whether a currency pair’s movement can be expected to be consistent or unpredictable over a period of time. Standard deviation is calculated by taking the square root of the variance of a dataset. In Forex, it is calculated by taking the square root of the sum of squared differences between each data point and the average rate for the currency pair. By doing so, traders can deduce the discrepancy of price movements and determine whether a currency pair may provide profit opportunities.

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