Volatility
Also called: volatile
How much and how quickly a price moves up and down. Highly volatile shares swing sharply in both directions.
Volatility describes the size of price swings. It is often measured statistically, but the plain idea is enough to start: a share that moves 5% on an ordinary day is far more volatile than one that moves 0.5%.
Volatility is not the same as permanent loss, but it makes losses more likely if you might need to sell at a bad moment.
Learn more in these lessons
- Bull markets, bear markets, corrections and crashesWhat are bull and bear markets, and how bad can a fall get?
- The risks of investing in sharesWhat are the risks of investing in the stock market?
- Risk, return, liquidity and time horizonWhy do higher returns come with higher risk?
- Circuit breakers and price bandsWhat is a circuit breaker in the stock market?
- Averages, spread and volatilityWhat does volatility mean in investing?
- Bollinger BandsHow are Bollinger Bands built, and what does it mean when price touches a band?
- Average true range (ATR)What is the average true range, and how is it used?
- Beta and market riskWhat does a share's beta tell you about its risk?
- Volatility and maximum drawdownHow do you measure the risk a portfolio actually puts you through?
- Benchmarks and measuring performanceHow do you measure whether your portfolio is doing well?
- Historical and implied volatilityWhat is implied volatility, and why does it matter so much for option prices?
Related terms
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