What is deviation in forex?

Solution
Deviation in forex often refers to the deviation from the expected value when an economic report or data point is released. For example, if economists expect the consumer price index (CPI) reading for a certain country to be 2.1% and then the actual figure released turns out to be 1.8%, the deviation here is -0.3%.

Some news sources refer to this news deviation as the surprise index. The element of surprise often moves markets if it is large enough, particularly with important news. For example, in April 2019, the Reserve Bank of New Zealand was expected to reduce interest rates by 0.25% points. However, the bank ended up shocking the markets and reducing the rate by 0.50% points. This caused the New Zealand dollar to...

FriendlyFX

Sergeant
Messages
171
I am a beginner but from what I am reading and learning, I can tell you the following:
Traders use it to put current price action into context by establishing a periodic closing price’s relation to an average or mean value. This is done by executing these basic tasks:

  • Defining a series of closing prices according to time or another periodicity
  • Calculating a mean value for the defined data set
  • Measuring the dispersion, or difference between the closing price and the mean value
Nice explanation especially as your a novice
 

Pelvell

Private, 1st Class
Messages
41
If you have any experience in trading and markets then you know that a sudden spike in volatility can close out a soon-to-be profitable trade as a loss. That's where standard deviation is useful - it establishes an inherent volatility of a currency pair before an order is ever placed. Standard deviation is a term used in statistics to measure the variance of a dataset from its mean value. If we will speak aboutmeaning of deviation in forex, then it's literally a volatility measurement. Traders use it to put current price into context by establishing a periodic closing price's relation to an average or mean value.
 

ele020

Sergeant
Messages
196
If you have any experience in trading and markets then you know that a sudden spike in volatility can close out a soon-to-be profitable trade as a loss. That's where standard deviation is useful - it establishes an inherent volatility of a currency pair before an order is ever placed. Standard deviation is a term used in statistics to measure the variance of a dataset from its mean value. If we will speak aboutmeaning of deviation in forex, then it's literally a volatility measurement. Traders use it to put current price into context by establishing a periodic closing price's relation to an average or mean value.
I have been using standard deviations a lot,, it helps to prevent extreme drawdown scenarios.
 
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