Definition 
A statistical measure that indicates how much your trading profits and losses deviate from your average PnL (Profit and Loss).  A higher standard deviation indicates greater volatility in your returns.

Formula
The calculation of standard deviation involves:

• Finding the mean (average) of your trade PnLs.
• Calculating the squared difference of each trade PnL from the mean.
• Averaging the squared differences.
• Taking the square root of the average squared difference.

Example
Let’s say your last 5 trades had the following PnL:

• Trade 1: +$250
• Trade 2: -$100
• Trade 3: +$150
• Trade 4: +$300
• Trade 5: -$50

If the calculated standard deviation of this PnL data is $180, it indicates that your individual trade profits/losses tend to vary by about $180 around your average PnL.

Key Points

• Risk Assessment: A higher standard deviation suggests higher volatility and risk in your trading performance.
• Strategy Evaluation: Can be used to compare the risk profiles of different trading strategies.

Considerations

• Sample Size: A larger sample of trades generally provides a more reliable standard deviation calculation.