Volatility (ความผันผวน)
Volatility describes how much and how fast the price of an asset moves up and down over a period of time.
Volatility is a measure of how much the price of something, such as a currency pair, gold or a stock, moves over a period of time. When prices swing widely and quickly, we say volatility is high. When prices move only a little, we say volatility is low.
Volatility is about the size of the moves, not the direction. A price that rises sharply and a price that falls sharply are both showing high volatility.
A simple example
Imagine two assets that both start the day at 100.
- Asset A moves between 99 and 101 during the day. The range is 2 points. This is low volatility.
- Asset B moves between 95 and 105 during the day. The range is 10 points. This is high volatility.
Asset B gives more chances for movement, but it also carries more risk, because the price can move against you by a larger amount in a short time.
Why it matters
Volatility often rises around major news, such as interest rate decisions or economic reports. It can also change from one trading session to another.
A common beginner mistake is ignoring volatility when choosing a trade size or placing a Stop Loss. In a high-volatility market, a very tight Stop Loss may be hit by normal price swings. Larger moves also mean larger possible losses on the same Lot size. Learn to check how much a market usually moves before you trade it.