VOLATILITY:

VOLATILITY:

Bitcoin / Dollar BITFINEX:BTCUSD


What is volatility?

When we discuss volatility , we are discussing how much a price moves over a certain period of time. In short, a more volatile market will move more frequently over a given time-frame, compared with a less volatile one. Now when we say that, we are talking about price movements, and that can be one of two things:

1. Proportional
2. Absolute

Both have their uses:

Namely:

– The proportionate measure is more useful for comparative purposes generally
– When we are specifically looking at currencies, it can be useful to talk in absolute terms

Measuring volatility is dependent on the time-frame you are focussing on. Which time-frame yields the most useful information will likely depend on what type of trader you are. You will be able to work out what works best for you through a process of trial and error, that’s best served via a Demo trading account. We hope that this discussion of the most volatile currency pairs will help you to add another dimension to your trading.

A Final Word On Volatility
Any complete strategy will include rules for:

– Which markets to trade
– When to trade specific markets
– Position sizing
– Risk management

Knowledge of a market’s volatility can help to inform your decision on all of the four points above – so it’s important.