Glossary
Volatility
A statistical measure of how much prices move up and down over a given period.
Volatility quantifies the dispersion of returns. High volatility means large price swings and higher risk. Common measures include standard deviation, Average True Range (ATR), and the VIX index for equities.
Key Points
- Volatility is not directional; it measures the size of moves, not their sign.
- Rising volatility usually requires smaller position sizes and wider stops.
- Different assets have different baseline volatility levels.