Traders use different information to trade on the currency exchange. The most important data is volatility.
Volatility is a financial indicator that reflects the change in price over a certain period of time. If the value of a currency changes 10 points up and 10 points down in one day, and then 100 points up and back, then we can say that in the first case there was low volatility, and in the second case there was high volatility. And accordingly, a high level of volatility indicates sharp price changes, and low volatility indicates small price fluctuations.
When starting trading in the foreign exchange market, it is very important for a trader to predict future volatility, for this he needs to take into account current and past performance. As a rule, low volatility alternates with high volatility and always returns to the average value. Based on the information received, the trader builds a future strategy.
Trading on the foreign exchange market is always associated with risk. Assets with high volatility are the most risky, but they allow the investor to make big money quickly. Simultaneously with the profitability, the degree of risk increases and you can lose all your invested funds.
Volatility depends on many factors. Any political or economic event in the country or in the world causes an increase in volatility. An increase in demand for an asset leads to an increase in prices and, accordingly, to an increase in the degree of volatility.
Many scientists are studying the theory of volatility. Analyze, identify patterns, and develop models so that volatility can be predicted more accurately later. Open methods and constructed models are used not only by scientists, but also by financial and market analysts.
