Volatility

In finance, volatility is the degree of variation of a trading price series over time, usually measured by the standard deviation of logarithmic returns. It is a measure of how much the price of an asset is expected to change in a given period.

• High volatility means that the price of an asset can change dramatically over a short time period in either direction.
• Low volatility means that the price of an asset does not fluctuate dramatically, but at a steady pace over a period of time.

Volatility is a key input in many financial models and is often used to price options. It is also an important factor for traders to consider when managing risk. Indicators like Average True Range (ATR) and Bollinger Bands (BB) are commonly used to measure volatility.