Can anyone help me?
Task. Calculate the volatility of 3 BTCUSDT candles with a Timeframe of 15 minutes. The closing prices of each candle are listed below:
• Candle 1 - $ 10
• Candle 2 - $ 12
• Candle 3 - $ 8
The formula for calculating volatility will be clear from the following solution.
Step 1. Find the average price:
10 $ + 12 $ + 8 $ / 3 = 10 $
Step 2. Calculate the difference between each price and the average price:
Candle 1: 10 - 10 = 0
Candle 2: 12 - 10 = 2
Candle 3: 8 - 10 = -2
Step 3. Square each difference from the previous step:
Candle 1: (0) squared = 0
Candle 2: (2) squared = 4
Candle 3: (-2) squared = 4
Step 4. Sum up the squares of the differences:
0 + 4 + 4 = 8.
Step 5. Find the mean variance:
Dispersion = 8/3 = 2.66
Step 6. Find the standard deviation mean:
Standard deviation = square root of 2.66 = 1.63.
Step 7. Determine the percentage standard deviation:
Candle 1: 1.63 / (12 $ / 100) = 16.3%
Candle 2: 1.63 / ($ 12/100) = 13.58%
Candle 3: 1.63 / ($ 8/100) = 20.375%
Step 8. Determine the percentage standard deviation mean:
Average standard deviation = (16.3 + 13.58 + 20.375) / 3 = 16.75% - let’s call ATR