Volatility

In stock trading, volatility refers to the size of fluctuations in a security’s price.

Volatility can be used as a guide for measuring risk because it shows how far the price has deviated from it average value (standard deviation).

Example: The sharper the fluctuations in a stock or bond’s price, the more volatile that security is. The higher the volatility of a stock or fund, the higher the risk of investing in it.

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