Standard deviation is a metric that shows the variability of a security’s returns over time. It can be used to gauge volatility based on past performance and compare a future return to past returns.

I recently discussed the ability to use implied volatility to calculate the probability of a successful outcome for any given option trade. To review briefly, the essential concepts a trader must ...

Discover normal distribution—a critical concept in finance—and its key properties, formula, and real-world applications.

Steven Nickolas is a writer and has 10+ years of experience working as a consultant to retail and institutional investors. Gordon Scott has been an active investor and technical analyst or 20+ years.

Paid non-client promotion: Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our ...

For a given data set, standard deviation measures how spread out the numbers are from an average value. This measurement of average variance has a prominent place in many fields related to statistics, ...