Market Volatility

Market volatility refers to the degree of variation in the price of a financial asset or market index over a specific period of time. It is an indicator of the extent of price fluctuations and uncertainty in the market. High volatility implies that prices can change dramatically in a short period, often due to various factors such as economic news, market sentiment, geopolitical events, or changes in supply and demand. Conversely, low volatility indicates more stable prices with smaller fluctuations.

Volatility is often measured using statistical methods, such as standard deviation or the average true range. It plays a significant role in risk assessment, as higher volatility can imply higher risk, but it can also present opportunities for traders and investors looking to profit from price movements. Understanding market volatility is crucial for making informed investment decisions and managing risks effectively.