Market Volatility

The volatility of a market is the measure of uncertainty associated with the price movement of an underlying financial asset.  Volatile markets will see vigorous price movements regularly while asset prices in markets that are non-volatile are much more stable.

Some asset are more volatile than others – for example exploratory mining and oil stocks are particularly vulnerable to severe price movements because of the high risk nature of their operations.  With these stocks, prices can move from being 10% down (or more) to 10% up in the same trading day.   On the other hand stock indices belonging to strong economies such as the US, UK and many European countries, tend only to fluctuate by small percentage points on a daily basis.