Volatility

Uncertainty in prices

Volatility is opportunity

Volatility typically represents the amount of uncertainty or risk in a trade, generally used to describe prices, but can be used for almost anything that has changed in value over time. Prices are an easy example, but volatility can also be revenue or any other measurable economic activity that changes over time. Volatility shows the degree of change observed in price charts. Large standard deviation is a way you can use volatility to your advantage.

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Using volatility in trading

When a financial chart moves up or down rapidly, this is considered volatility. Volatility can occur for assets in any market but is more prevalent in highly volatile markets like Cryptocurrency. Volatility offers multiple risks and rewards for traders.

There are several ways to measure volatility in an asset. The most common technical indicators are the Commodity Channel Index (CCI), Choppiness Index (CHOP), and Average True Range (ATR)

Volatility allows traders to make money by utilizing this volatility in an asset in a way they can not with a flat price movement asset.

Scalping techniques involve traders utilizing a short time frame of volatility due to the nature of specific trades. There is a limited time for traders to implement scalping in trades. This timeframe can last from a few minutes to a few hours at most. Other strategies like swing trading do not involve as much volatility because trades can last a few days to several weeks.

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