What is the Volatility?

Modified on Thu, 22 Aug at 12:38 PM

Volatility measures the magnitude of price changes in a financial asset, forming the basis for assessing operation risk.

  • The higher the market Volatility, the greater the short-term profitability, but the investment in that asset is considered riskier since, as with the profit, the loss can also be greater.

  • On the other hand, an asset with low Volatility represents a very low-risk investment.


As with Liquidity, Volatility is one of the factors that affects the Spread since an increase in risk (Volatility) will also increase the cost of my trade.


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