Watch a price chart flicker and you are seeing volatility in action. It measures how much and how quickly an asset’s price moves over time. Large, frequent swings signal high volatility; steady paths indicate low volatility.

Volatility is not inherently negative. Traders may seek it for short-term opportunities, while long-term investors often prefer smoother paths. It is commonly quantified using statistical measures such as standard deviation.

Events like earnings releases, economic data, or geopolitical shocks can trigger sudden spikes. Options markets embed expectations of future volatility, which influences pricing and hedging strategies.

What drives it

• News and unexpected events
• Changes in liquidity and trading volume
• Market sentiment and positioning
• Economic data and policy decisions