Volatility
The degree of price variation over time.
Full Definition
Volatility measures how much and how quickly prices change. High volatility means larger price swings and potentially bigger profits or losses. Low volatility indicates smaller, steadier price movements. Volatility is often measured using indicators like ATR (Average True Range) or Bollinger Bands. Different trading strategies suit different volatility environments.
Example
During major news releases like NFP, EUR/USD might move 50-100 pips in minutes (high volatility). During Asian session, it might only move 20 pips over hours (low volatility).
Related Terms
ATR (Average True Range)
Measures market volatility by averaging price ranges.
Bollinger Bands
Volatility bands that expand and contract based on price movement.
Liquidity
How easily an asset can be bought or sold without affecting price.
Risk Management
Strategies to protect trading capital from excessive losses.
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