Average Deviation (Mean Absolute Deviation) (AVGDEV)

AVGDEV calculates the mean absolute deviation over a specified period (default 14), measuring the average distance of price from its mean without squaring deviations like variance does. Formula: sum(|price - mean|) / n. AVGDEV provides volatility measurement similar to standard deviation but using absolute values rather than squared values, making it less sensitive to extreme outliers. It's also known as Mean Absolute Deviation (MAD). AVGDEV gives volatility in price units, making it more intuitive than variance but less commonly used than standard deviation.

Cryptocurrency traders use AVGDEV as an alternative volatility measure when they want outlier-resistant volatility quantification. Unlike standard deviation which heavily weights extreme moves due to squaring, AVGDEV treats all deviations linearly, providing more stable volatility readings in markets with occasional spikes. AVGDEV is useful for building custom volatility indicators, calculating position sizes, or creating adaptive indicators that respond to typical volatility rather than extreme events. It's particularly valuable in crypto markets prone to sudden spikes that distort squared-deviation measures. Used by quantitative traders preferring robust volatility statistics.