Volatility refers to the degree of variation in the price of a financial instrument over time. It is most commonly measured by the standard deviation of returns or by the average true range. Generally, higher volatility indicates a larger price range and greater uncertainty regarding the value of the asset, while lower volatility suggests more stable prices. In many markets, including equities, Forex, and commodities, volatility can be influenced by various factors such as economic data releases, geopolitical events, and market sentiment. Traders often use volatility as a key parameter to assess risk and make informed decisions regarding their investment strategies.
