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Volatility is a key metric used by traders to describe the degree of variability in the price of an asset. Volatile assets experience greater price swings, while assets with very stable prices and fewer large moves are less volatile. In general, riskier assets are more volatile, but the measure and result of volatility depends on many different factors. Equities are typically more volatile than bonds, whilst volatility in currencies varies according to their type, with emerging markets currencies particularly volatile.
An imaginary stock which increased in value by 100% each session would be highly volatile, but not many investors would worry about taking on this type of volatility. Simply measuring variability in price doesn’t give the full picture – investors are much more sensitive to falling prices than rising
ones, so multiple measures exist. The two most frequently used are variance and standard deviation.
Volatility varies between assets, with equities considered more volatile than bonds, and certain sectors such as energy and tech stocks more volatile than consumer goods stocks. One important thing to remember is that volatility can be generalised across markets – if there is a sudden spike in volatility in tech shares, this could be accompanied by an increase in volatility for utilities shares also. In a major market downturn, assets often move down in price together as investors flee to cash or cash equivalents such as US Treasury bills.
ADSS offers a range of global markets for traders, with opportunities in indices, commodities, forex, equities and more. We also feature tutorials, how-to guides, and weekly webinars to help you navigate the financial markets and find better trading opportunities. You can start trading and investing online by opening a live trading or demo trading account.
ADSS
8th floor, CI Tower
Corniche Road
PO Box 93894
Abu Dhabi
United Arab Emirates
Trading Services
ts@adss.com
+971 2 657 2414
Investing in CFDs involves a high degree of risk that you will lose your money due to the use of leverage, particularly in fast moving markets, where a relatively small movement in the price can lead to a proportionately larger movement in the value of your investment. This can result in loses that exceed the funds in your account. You should consider whether you understand how CFDs work and you should seek independent advice if necessary.
ADS Securities LLC – S.P.C (“ADSS”) is authorised and regulated by the Securities and Commodities Authority (“SCA”) in the United Arab Emirates under First Category: Dealing in Securities and Fifth category: Arrangement and advice (Introduction). ADSS is a Limited Liability Company – Sole Proprietorship Company incorporated under United Arab Emirates law. The company is registered with the Department of Economic Development of Abu Dhabi (No. 1190047) and has its principal place of business at 8th Floor, CI Tower, Corniche Road, P.O. Box 93894, Abu Dhabi, United Arab Emirates.
The information presented is not directed at residents of any particular country outside the United Arab Emirates and is not intended for distribution to, or use by, any person in any country where the distribution or use is contrary to local law or regulation.
ADSS is an execution only service provider and does not provide advice. ADSS may publish general market commentary from time to time. Where it does, the material published does not constitute advice, or a solicitation, or a recommendation to a transaction in any financial instrument. ADSS accepts no responsibility for any use of the content presented and any consequences of that use. No representation or warranty is given as to the completeness of this information. Anyone acting on the information provided does so at their own risk.
