Volatility

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    VolatilityWhat is price volatility?

    Volatility is the price fluctuation or price change of a financial instrument over a certain period of time.

    When the price fluctuation is high over a relatively short period of time, it is said that the volatility is high. When the price fluctuation is moderate over a short period of time, it is said that the volatility is low.

    Volatility does not measure the direction of the price, it is purely the fluctuation.

    Volatility is important for traders because they profit from the changes in price — there are more trading opportunities when the volatility is high. However, during periods of high volatility, the risk is also higher.

    Volatility is calculated in many ways and by using many different indicators, such as Bollinger bands and average true range (ATR):

    Read more about volatility and learn how to measure it using indicators on a price chart: