When we discuss volatility, we are discussing how much a price moves over a certain period of time. In short, a more volatile market will move more frequently over a given time-frame, compared with a less volatile one. Now when we say that, we are talking about price movements, and that can be one of two things:
1. Proportional 2. Absolute
Both have their uses:
Namely:
- The proportionate measure is more useful for comparative purposes generally - When we are specifically looking at currencies, it can be useful to talk in absolute terms
Measuring volatility is dependent on the time-frame you are focussing on. Which time-frame yields the most useful information will likely depend on what type of trader you are. You will be able to work out what works best for you through a process of trial and error, that's best served via a Demo trading account. We hope that this discussion of the most volatile currency pairs will help you to add another dimension to your trading.
A Final Word On Volatility Any complete strategy will include rules for:
- Which markets to trade - When to trade specific markets - Position sizing - Risk management
Knowledge of a market's volatility can help to inform your decision on all of the four points above - so it's important.
Totally agree and every system should include market range. Choosing a more volatile pair to trade over a month can bank a lot more pip's than the less volatile pair.
Commodities have some of the highest market ranges that why I like to trade WTI and gold.
Here's BTC current market range's over 30 bar's for anyone interested
D1 34734.3
W1 72637.0
MN 219304.4
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@Boon2, Yes, the overall correction length of the parity shows us away when we do this analysis...
Boon2
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BTCUSD H1 C UP. Checkout the idea detail's and update's for the complete picture.