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- Volatility
Volatility
Volatility is a measure of the degree of variation in an asset’s price over time. Assets that experience large changes in price regularly are more volatile, whereas assets that have a more stable price are less volatile. Volatile assets result in more risk for the asset’s owner.
An asset’s historical volatility can be calculated based on past prices. Future volatility can only be a prediction since those prices are yet to be seen. However, traders can examine the futures contract market to learn the implied volatility that the market has set.
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