What is volatility?

What is volatility?

Volatility refers to how much and how quickly share prices move up and down. A highly volatile stock may rise or fall by large amounts in a single day. A low-volatility stock tends to move more steadily, changing only a little each day.

Volatility is driven by many factors. Company announcements, earnings reports, global news, investor sentiment, and even economic data. For example, small speculative companies can see wild swings of 10% or more in a single session. In contrast, a large blue-chip bank may only move 1-2% in a day, even on heavy news.

For investors, volatility represents both risk and opportunity. High volatility can create chances for quick profits but also exposes you to sudden losses. Low volatility means fewer dramatic gains but provides stability. Beginners should think about volatility in terms of their own comfort with risk. If big swings in value cause stress, it may be better to stick with steadier, lower-volatility shares until you’re more experienced.