Volatility in stocks refers to the degree of fluctuation in a stock’s price over time. Simply put, volatility measures how much and how often the stock price changes — the higher the volatility, the larger the price swings, and vice versa.
Why Volatility?
Within this strategy, we prefer low volatility, as the goal is to stay in a trade for several weeks and gradually accumulate small gains, typically in the range of a few tenths of a percent.
A stop-loss is usually set around -3%, so we want to avoid being prematurely stopped out due to short-term price swings caused by high volatility.
Although higher volatility may offer greater return potential, it also comes with increased risk. In this case, we prefer more stable and consistent returns over speculation on sharp price movements.
Answers and Score
| ANSWER | SCORE | PRIORITY |
| Low volatility: 0–2% | 10 | 1,2 |
| Medium volatility: 2–3.5% | 7 | 1,2 |
| High volatility: 3.5% and above | 2 | 1,2 |
Where to find volatility values?
You can find the value, for example, on finviz.com.
This question is part of this analyzer.
| Decameron Stock Analyzer – Swing trading, v.1.0 | open analyzer |
