What is market volatility

Volatility is an investment term that describes when a market or security experiences periods of unpredictable, and sometimes sharp, price movements. People often think about volatility only when prices fall, however volatility can also refer to sudden price rises too.

Is market volatility good or bad?

Volatility is not always a bad thing, as it can sometimes provide entry points from which investors can take advantage. Downward market volatility offers investors who believe markets will perform well in the long run to buy additional stocks in companies that they like at lower prices.

What causes market volatility?

Increased market volatility is usually caused by economic or policy factors, including changes in other markets, interest rate hikes, and the Fed's current monetary policy. Political instability and other global events, like a pandemic or a war, can also lead to market volatility.

What does volatility mean in simple terms?

: a tendency to change quickly and unpredictably. price volatility. the volatility of the stock market.

What is market volatility risk?

Market risk is the possibility of losing money in financial markets no matter how well diversified your portfolio may be. Volatility is the range of price movements of a single security or a set of securities (like all stocks traded on U.S. exchanges).