Standard deviation is a measure of dispersion. In finance, it is widely used as measure of volatility of an investment.
The higher the standard deviation of an asset, the more volatile the asset is.
The Standard deviation is simply the square root of the Variance. The Variance is calculated by taking the sum of the differences between the data values and the mean, squaring the result and then dividing it by the number of data points in the population. This formula applies when working with a complete population. In the case of a sample population, you should divide the result by the number of data points in the population minus one.
Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
