The market volatility is the amount of distance between rising or falling stock prices or foreign exchange. High volatility means that prices go up high quickly and then suddenly go down quickly, thus creating a huge difference between the lowest price and the highest price at a time. In this way, volatility is valued as a random value and its mathematical modeling provides the basis for all risk assessment methods, which are used in the Foreign Exchange market. For volatility measurement, the standard deviation of statistics is calculated, this also determines the exposure of financial investments. In addition, you can also visit http://www.volatility75.net/ to find out more details about market volatility.
In intraday trading, the most significant volatility indicator is the average daily price range; In evaluating positions a longer range of weekly, monthly, or yearly averages can be used. Annual volatility is most common in long-term financial investment analysis.
Historical volatility is equal to the standard deviation of the value of the asset within a specified time period, calculated from historical prices.
Expected volatility is calculated from current prices with the assumption that the market price of an asset reflects the expected risk.
Volatility is considered by Forex traders as one of the most important information indicators for decisions on opening or closing currency positions. This can be assessed through the following financial indicators: Bollinger Bands, Commodity Channel Index, Average True Range. Everything is integrated in the popular trading platform. Another vital index is the RVI (Relative Volatility Index). This reflects the direction of changing price volatility. The main characteristic of RVI is that it confirms Forex oscillator signals (RSI, MACD, Stochastik, etc.) without duplicating.
It’s because the Relative Volatility Index is determined by market data dynamics, which are not covered by other indices, it can function as an excellent verification tool. This is RVI, used as a filter for independent indicators, which can determine the strength of a trend, measure volatility, not price, and this brings the missing authentication element to the trading system.