Volatility
Volatility describes the magnitude and variability of price movements over a period. Higher volatility means price is moving more widely or rapidly relative to lower volatility conditions.
Why it matters to you
Volatility affects stop placement, position sizing, liquidation risk and expected price movement. A stop distance that works in a quiet market may be far too tight during highly volatile conditions. Risk management should therefore account for the behavior of the market being traded.
Terms that sit next to this one
Implied Volatility
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