Trading glossaryReviewed 16 July 2026
Definition
Volatility describes the magnitude and frequency of price changes over a period, measured historically or inferred from market prices under a stated method.
In market context
Higher volatility means a wider range of possible short-term outcomes, not a direction or a guarantee of loss. It can widen spreads, increase margin requirements, trigger stops, and make execution prices less predictable. Historical estimates depend on the sample and can understate sudden regime changes, so position sizing should account for gaps and stressed conditions as well as ordinary fluctuations.
Source
Use the primary source for fuller regulatory or market context.