Saturday, July 20, 2024

Volatility

Volatility is a measure of the amount by which price fluctuates over a given period.

In forex trading, volatility measures how large the upswings and downswings are for a particular currency pair.

When a currency’s price fluctuates wildly up and down, it is said to have high volatility.

When a currency pair does not fluctuate as much, it is said to have low volatility.

It’s important to note how volatile a currency pair is before opening a trade.

Volatility should always be taken into consideration when choosing your position size and stop loss level.

Why Should You Care?

Well, whether you’re a newbie or a seasoned trader, understanding volatility can shape your trading adventures.

  • It’s a Risk Radar: More volatility? More unpredictability. Knowing this can help you decide if you want to jump in or sit one out.
  • Spotting Opportunities: Just as surfers love waves, traders love a bit of volatility—it can mean more opportunities to profit.

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