Bolinger's calculation makes use of a moving average; 20 periods were chosen here and the standard deviation of each average. For each average, a distribution is calculated that consists of the average subtracted from each of the 20 period values. The resulting distribution is manipulated into a bell curve. Most values are near the average and receive a (deviation = distance) score close to 0, outliers receive a score with a higher signed value. The sign tells you that the value was above or below the mean, while the score is a function of how rare the given score would be. Given the small number of samples, a score of (+/-) 2 represents a fairly rare event. (If the sample size were larger, say 500, a score of 2 would represent a very rare event.) I've been computing SD's for about 5 decades. Lets see if I can provide an intuitive, non-technical explanation. Hope it helps.
You explained it very well for me a beginner
Good to hear! Thanks for watching, and I'll see you in the next one! ^CM
Thanks CM. Great class
My pleasure! ^CM
Bolinger's calculation makes use of a moving average; 20 periods were chosen here and the standard deviation of each average. For each average, a distribution is calculated that consists of the average subtracted from each of the 20 period values. The resulting distribution is manipulated into a bell curve. Most values are near the average and receive a (deviation = distance) score close to 0, outliers receive a score with a higher signed value. The sign tells you that the value was above or below the mean, while the score is a function of how rare the given score would be. Given the small number of samples, a score of (+/-) 2 represents a fairly rare event. (If the sample size were larger, say 500, a score of 2 would represent a very rare event.)
I've been computing SD's for about 5 decades. Lets see if I can provide an intuitive, non-technical explanation. Hope it helps.
Thanks for taking the time to write this up, Harry, and thanks for watching! ^CM
Nice job!
Thank you! ^CM