Mean Absolute Deviation Indicator Explained

Mean Absolute Deviation (MAD) averages the absolute distances from the mean — no squaring. Where one crazy bar inflates standard deviation for the whole window, MAD barely blinks: it reports what a typical deviation looks like, not what the worst one did.

How It Works

• Average of |price − rolling mean| over N bars.
• Robust to outliers by construction.
• Consistently smaller and steadier than StdDev on the same data.

How to Trade It

Use MAD where shock bars keep poisoning your volatility logic: band widths, adaptive thresholds, and normalization on news-prone symbols. A widening StdDev/MAD ratio is itself informative — it means recent volatility is outlier-driven, not broad.

Building It in Setup.Cash

Add Mean Absolute Deviation in the strategy builder — the length input controls its sensitivity — and use its value in any entry, exit, or filter condition. You can also combine it with other tools in the Indicators Lab or via the AI indicator generator. See StdDev for the classical measure. For the full category overview, see the volatility & statistics library guide.

Volatility indicators qualify trades rather than generate them — backtest your system with and without this filter and compare the drawdowns.