Bell Curve

AAA

DEFINITION of 'Bell Curve'

The most common type of distribution for a variable. The term "bell curve" comes from the fact that the graph used to depict a normal distribution consists of a bell-shaped line.

The bell curve is also known as a normal distribution. The bell curve is less commonly referred to as a Gaussian distribution, after German mathematician and physicist Karl Gauss, who popularized the model in the scientific community by using it to analyze astronomical data.

INVESTOPEDIA EXPLAINS 'Bell Curve'

The highest point in the curve, or the top of the bell, represents the most probable event. All possible occurrences are equally distributed around the most probable event, which creates a downward-sloping line on each side of the peak.

RELATED TERMS
  1. Venn Diagram

    An illustration that uses overlapping or non-overlapping circles ...
  2. Normal Distribution

    A probability distribution that plots all of its values in a ...
  3. Statistics

    A type of mathematical analysis involving the use of quantified ...
  4. Mean

    The simple mathematical average of a set of two or more numbers. ...
  5. Variability

    The extent to which data points in a statistical distribution ...
  6. Monte Carlo Simulation

    A problem solving technique used to approximate the probability ...
Related Articles
  1. Markets

    The Uses And Limits Of Volatility

    Check out how the assumptions of theoretical risk models compare to actual market performance.
  2. Forex Education

    Trading With Gaussian Models Of Statistics

    The entire study of statistics originated from Gauss and allowed us to understand markets, prices and probabilities, among other applications.
  3. Options & Futures

    An Introduction To Value at Risk (VAR)

    Volatility is not the only way to measure risk. Learn about the "new science of risk management".
  4. Mutual Funds & ETFs

    Stock Market Risk: Wagging The Tails

    The bell curve is an excellent way to evaluate stock market risk over the long term.
  5. Technical Indicators

    Why is the 200 Simple Moving Average (SMA) so common for traders and analysts?

    Learn about the 200 simple moving average (SMA), how it is utilized by traders and analysts, and why it is considered to represent major support or resistance.
  6. Trading Strategies

    How do I build a profitable strategy when spotting a Three White Soldiers pattern?

    Learn a simple trading strategy implemented based on the bullish market reversal signal given by the three white soldiers candlestick pattern.
  7. Trading Strategies

    How are Three Black Crows patterns interpreted by analysts and traders?

    Understand the basics of the three black crows pattern and how analysts and traders interpret this bearish reversal pattern when creating a trading strategy.
  8. Trading Strategies

    How effective is creating trade entries after spotting a Symmetrical Triangle pattern?

    Understand the symmetrical triangle pattern and the likely success of the most common breakout trading strategy implemented when the pattern is identified.
  9. Forex Strategies

    How do I implement a forex strategy when spotting a Rounding Bottom Pattern?

    Understand the key factors to implementing a profitable forex trading strategy based on recognizing the formation of a rounding bottom pattern.
  10. Trading Strategies

    How are Stick Sandwich patterns interpreted by analysts and traders?

    Understand the basics of the stick sandwich candlestick pattern and how this reversal signal is interpreted by analysts and traders.

You May Also Like

Hot Definitions
  1. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  2. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  3. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  4. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  5. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  6. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
Trading Center