It is not a secret that the Forex market is one of the most volatile due to its liquidity of more than 5 trillion dollars per day. It is a market volatility that does not present the futures or stock markets and that is why it is so attractive to the retail trader that seeks to make a profit in a short time. However, to have the volatility in your favor it is important to highlight that it can be a double-edged sword when trading. As with leverage, if you have a huge Forex volatility in an asset and it plays in your favor, then the gains can be exponential.
What is the volatility of an asset?
The volatility of the market has to do with the variation of a price with respect to its average in statistical terms. In short, volatility is related to the speed at which an asset moves, be it a currency pair or an action and it is expressed in pips or in percentage. There are indicators such as the CBOE volatility index or the VIX that give an overview of the general scenario in which the assets are moving. They are indicators of appetite or aversion to risk in financial markets. You can read the Avatrade review for more such details and solutions.
Who or what causes volatility in financial markets?
There is a misconception of traders with respect to the origin of volatility in trading and it is that this has to do … Read More . . .