Volatility describes how much and how quickly a price moves up and down.
Volatility measures the size and speed of price changes in a market. When a market is highly volatile, prices swing sharply in short periods; when volatility is low, prices move slowly and stay more stable. Volatility isn’t good or bad on its own — it simply means more movement, which brings both more opportunity and more risk. Traders pay close attention to volatility because it affects how large a position should be and how much room a trade needs to breathe. Understanding volatility helps a trader prepare instead of being caught off guard.
Think of volatility like the weather. Some days are calm and predictable; others bring sudden storms. A prepared traveller checks the forecast and packs accordingly. In trading, volatility is that forecast — it tells you how rough the conditions might be, so you can size up and protect your trades sensibly.
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