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.
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.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.