▪️Volatility is the degree of price change of an asset over a certain period of time. It is a key indicator of risk and an integral element of financial markets.
Understanding volatility helps to determine how much an asset's price can change over a short period of time.
High volatility means that an asset's price can fluctuate significantly throughout the day, which on one hand can bring substantial profits, but on the other hand can also entail significant risks. In contrast, low volatility indicates that the asset's price changes more smoothly and predictably, limiting potential income but also reducing risks.
So how can we use volatility to our advantage?🤔
First of all, volatility is neither bad nor good; it is simply a tool that can help us in trading.
🔘Aggressive strategy: If you prefer an aggressive strategy, high volatility can provide you with more trading opportunities. You just need to closely monitor the market and be ready for quick and significant price movements.
🔘Conservative strategy: If you prefer a more conservative approach, periods of low volatility will be more suitable. During these periods, prices change more slowly and predictably, which reduces the likelihood of encountering unforeseen surprises.
🔴Regardless of your preferences, it is always important to manage your risks. Protect your funds from excessive losses and never forget this.