Adaptive Deviation

By definition, the Standard Deviation (SD, also represented by the Greek letter sigma σ or the Latin letter s) is a measure that is used to quantify the amount of variation or dispersion of a set of data values.

In technical analysis we usually use it to measure the level of current volatility.

Know about this indicator

The adaptive deviation is a free MT5 indicator that helps you analyze trading conditions. It indicates how much the current market condition deviates from the average market condition and provides a forecast of where the market might go next in the MT5 chart.

Standard Deviation is based on Simple Moving Average calculation for mean value. The built-in MetaTrader 5 Standard Deviation can change that and can use one of the 4 basic types of averages for calculations. This version is not doing that. It is, instead, using the properties of EMA to calculate what can be called a new type of deviation, and since it is based on EMA, we shall call it EMA deviation.

And added to that, Perry Kaufman’s efficiency ratio is used to make it adaptive (since all EMA type calculations are nearly perfect for adapting)

The difference when compared to standard is significant – not just because of ema usage, but the efficiency ratio is making it a “bit more logical” in very volatile market coditions

What should I do if I find signs of Adaptive Deviation?
If you see indications that there may be a new trend emerging in the markets, it’s important to pay close attention and take appropriate action.

By analyzing Adaptive Deviation indicators together with other technical indicators, you can develop more informed trading strategies and make more profitable investments

How to use it in the MT5 chart?
To use adaptive deviation in MetaTrader 5, first, open your account and select Statistics > Adaptive Deviation (ADV).

This will open the ADV window. In this window, you can specify your timeframe (Daily, Weekly, or Monthly), as well as your trend type (Moving Average or EMA).

You can also adjust other settings such as weighting bias and smoothing period.

After setting up these parameters, click on “Start” to start collecting data. The system will then run a series of simulations based on your settings and update ADVs accordingly. As always, be sure to review charts for any changes before making future decisions!