StdDev or Standard Deviation Definition
StdDev is an abbreviation for Standard Deviation – a widely used mathematical formula. The Wikipedia entry contains a section on finance about halfway down. In one sentence, StdDev gives an idea how much the trade results vary and a smaller StdDev is generally better.
Extra Insight:
In the backtesting results, I apply the Excel formula Stdev.
Smaller standard deviations generally make for better trading strategies, provided the strategy also has a positive expectancy to indicate potential profits.
Updated 11/13/08.
October 14th, 2008 Filed under GlossaryTags: backtesting, expectancy, indicator, risk, standard deviation, strategy, trading
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