Definition. A measure of how much and how fast an instrument's price changes over a given period.
How it works
Volatility can be measured by the daily range, by indicators such as ATR or by the standard deviation of price changes. For the US stock market, the VIX index is a popular measure of expected volatility.
Example
In a week with a Fed decision and an inflation release, the typical daily range on MYM is clearly wider than in a quiet holiday period.
What to watch out for
Volatility changes over time and can spike suddenly. It affects risk, slippage and the trader's emotional state.
You'll find the full explanation with graphics, examples and exercises in the 🖥️ Order flow atlas space, and its use in the live market in the 🔴 Live Room. Both are available to Club members (in Polish).
