Volatility Definition – What is Volatility? | CFI LB


If the price of the asset is unstable and changes frequently, with big spikes from time to time, the asset is said to have high volatility. On the other hand, if the price is consistent and stable over a long period, the asset is said to be less volatile. As a new trader, you must decide if trading during the highly volatile trading session is part of your strategy or if you feel more comfortable during times of quieter market movements. If you’re looking for a lot of market movements then you might schedule those times when different trading sessions overlap into your trading strategy. These timings can vary depending on which products and how many different asset classes you trade.


The commodity market is characterized by high near-term volatility. Sometimes, even a relatively small incident can cause a large swing in prices. In 2020, crude prices plummeted to the point where there was more supply than demand and companies were paying people to take the oil off their hands. Especially in Saudi Arabia, which is among the world’s largest oil-producing countries.


The volatility calculator helps traders employ money management strategies by reducing their position sizes at times of high volatility. It computes historical volatility in real-time for each currency pair using past information on exchange rates for several timeframes which can range from one week to one year.



Key takeaways

  • Volatility is the measure of price fluctuations on an asset over a given time period.
  • Do your research, it is important to gain some knowledge of trading and the factors impacting market prices.
  • A volatility calculator helps traders employ money management strategies.
CFI Financial Group is an award winning global financial markets provider with over 23 years of experience and regulated entities in several jurisdictions, focused on offering impeccable execution and trading conditions including very low spreads, professional services, dedicated support and powerful tools.
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CFI provides execution-only services and does not provide any investment advice. To make an investment decision, you cannot rely on the content of this website, or on any information, opinion, report or other materials (“Information”) you receive from CFI, or its representatives. Such Information is general and does not consider your objectives and your financial situation, thus they shall not be considered in any way as an express or implied promise nor a guarantee of any profit or limit of loss. CFI shall not bear any liability in case you used or relied on such Information. Please ensure that you make your own research and seek independent advice if necessary.

Forex and CFDs are leveraged products that incur a high level of risk. A small adverse market movement may expose the client to lose the entire invested capital. The majority of retail client accounts lose money when trading in CFDs. Please be aware of trading risks and that you could sustain a loss exceeding your deposited funds, even if a stop loss is used.

CFI Lebanon is regulated by the Banque du Liban and the Capital Markets Authority

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