Glossary

Volatility

How much an asset's price fluctuates over time. High volatility means larger swings; it measures turbulence, not direction — and is not the same thing as risk.

Volatility measures the size of an asset's price movements — the amplitude of the swings, up or down. It says nothing about direction: a market can be volatile while rising or while falling.

Volatility is often used as a shorthand for risk, but the two are not identical. A permanent loss of capital is a risk; a temporary, recoverable swing is volatility. Confusing the two leads investors to sell turbulence at exactly the wrong moment.

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