High volatility usually requires:

Wider stops. Bigger swings need more room.

Volatility tends to be:

Cyclical. It cycles between calm and active.

Position size should come from:

The stop distance. Risk divided by stop distance.

Courses / Volatility and Volume Indicators

What Is Volatility?

How much price moves, and why it drives your stop and position size.

Volatility measures how much price moves over a period. High volatility means large swings and wider stops. Low volatility means small moves and tighter ranges.

Volatility is cyclical: calm periods tend to be followed by active ones. Knowing the current level helps you set realistic stops and targets.

Always size positions based on the stop distance, which should reflect volatility, not on a fixed number of lots.

Key takeaways

Volatility = size of price movement
It moves in cycles
Size positions from the stop distance

Quiz

High volatility usually requires: Answer: Wider stops. Bigger swings need more room.
Volatility tends to be: Answer: Cyclical. It cycles between calm and active.
Position size should come from: Answer: The stop distance. Risk divided by stop distance.

Educational content, not financial advice.