Array.stdev funstion in Pine Script

In this tutorial, we will discuss the array.stdev function in Pine Script, which is used to calculate the standard deviation of an array’s elements. We will go through the syntax of the function, its arguments, and a unique use case example. In the end, we will highlight the key takeaways before concluding the tutorial.

What is the Array.stdev Function?

Definition

The array.stdev function is used to compute the standard deviation of an array’s elements in Pine Script. It can be used with both float and integer arrays. The standard deviation is a measure of the dispersion or spread of the data in the array. A high standard deviation indicates that the data points are spread out over a large range, while a low standard deviation indicates that they are close together.

Syntax

The syntax for the array.stdev function is as follows:

array.stdev(id, biased) → series float
array.stdev(id, biased) → series int

Arguments

The function takes two arguments:

1. id (int[]/float[]): The array object for which the standard deviation needs to be calculated.
2. biased (series bool): Determines which estimate should be used. This argument is optional, and the default value is true.

Remarks

The biased argument determines the type of estimate used for the calculation. If biased is true, the function calculates the standard deviation using a biased estimate of the entire population. If biased is false, it calculates using an unbiased estimate of a sample.

Use Case Example

Now let’s explore a unique use case example that demonstrates how to use the array.stdev function in Pine Script. In this example, we will calculate the standard deviation of the closing prices of the last 10 bars and plot it on the chart.

Code

//@version=5
indicator("Standard Deviation of Closing Prices")

// Initialize the float array
priceArray = array.new_float(0)

// Loop through the last 10 closing prices and add them to the array
for i = 0 to 9
    array.push(priceArray, close[i])

// Calculate the standard deviation of the closing prices
stdDev = array.stdev(priceArray, false)

// Plot the standard deviation
plot(stdDev, title="Standard Deviation", color=color.blue, linewidth=2)
label newLable = na
if barstate.islast
    newLable := label.new(x=bar_index, y=stdDev, style=label.style_label_left, 
     color=#E6E6FA, textcolor=color.black, size=size.large, 
     text="Standard Deviation = \n " + str.tostring(stdDev ))
label.delete(newLable[1])

Explanation

Here is an explanation of each line of the provided code:

1. //@version=5: This line sets the version of Pine Script used for the script. In this case, it is version 5.
2. indicator("Standard Deviation of Closing Prices"): This line defines the title of the indicator displayed on the chart.
3. priceArray = array.new_float(0): This line initializes an empty float array named priceArray.
4. for i = 0 to 9: This line starts a loop, iterating through the last 10 closing prices (from 0 to 9).
5. array.push(priceArray, close[i]): This line pushes the closing prices of the last 10 bars into the priceArray.
6. stdDev = array.stdev(priceArray, false): This line calculates the standard deviation of the closing prices in the priceArray using an unbiased estimate (false) and stores the result in the stdDev variable.
7. plot(stdDev, title="Standard Deviation", color=color.blue, linewidth=2): This line plots the standard deviation on the chart with the title “Standard Deviation,” a blue color, and a linewidth of 2.
8. label newLable = na: This line initializes a new label variable named newLable and sets its initial value to na (not available).
9. if barstate.islast: This line checks if the current bar is the last one on the chart.
10. newLable := label.new(...): If the current bar is the last one, this line creates a new label with the specified properties (x and y coordinates, style, color, text color, size, and text) and assigns it to the newLable variable. The text displays the standard deviation value calculated earlier.
11. label.delete(newLable[1]): This line deletes the previous label (if any) from the chart to ensure that only the label for the current bar’s standard deviation is displayed.

Key Takeaways

1. The array.stdev function is used to calculate the standard deviation of an array’s elements in Pine Script.
2. The syntax for the function is array.stdev(id, biased).
3. The function takes two arguments – id and biased. The id argument is the array object, and the biased argument is a boolean determining which estimate should be used for the calculation. The default value for biased is true.
4. If biased is true, the function calculates the standard deviation using a biased estimate of the entire population. If biased is false, it calculates using an unbiased estimate of a sample.
5. The array.stdev function can be used in various scenarios, such as calculating the standard deviation of closing prices, as demonstrated in the example provided.

Conclusion

In this tutorial, we have covered the array.stdev function in Pine Script, which is used to compute the standard deviation of an array’s elements. We went through its syntax, arguments, and provided a unique use case example to illustrate its practical applications.

Understanding and using the array.stdev function is essential for traders and analysts who want to calculate the dispersion or spread of their data points. By leveraging this function, you can easily incorporate standard deviation calculations in your trading strategies and technical analysis, allowing you to make more informed decisions based on the volatility of the market.