Volatility is the degree to which the price of a share or market fluctuates. The stronger and faster the price moves, the higher the volatility. It does not indicate direction, only the size of the movements.

High volatility means larger price fluctuations in a short period of time. When a share makes only small daily movements, volatility is low. But if the price rises and falls sharply within a short period, we speak of high volatility. Volatility is often measured over a specific period and gives investors an idea of risk.

An investment with high volatility can generate profits quickly, but it can also cause losses just as quickly. Markets can become more volatile during periods of uncertainty, for example around economic data releases or geopolitical events.

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