Markets · Investing Glossary
What Is Volatility?
The degree of price fluctuation in an asset over time.
The Full Definition
Volatility measures how much an asset's price moves up and down over time. High volatility means large, frequent price swings. Low volatility means steadier, more predictable movement. In investing, volatility is often used as a proxy for risk — but it's important to understand that short-term volatility and permanent loss of capital are very different things. For long-term investors, volatility creates opportunity; it's only a problem if it forces you to sell.
Real-World Example
A stock that moves ±5% on a typical day is highly volatile. An S&P 500 index fund moves much less on average. Bitcoin is famously volatile — its price has swung 80%+ in both directions within a single year.