Volatility

When traders say a market is "volatile," they mean prices are moving sharply and unpredictably. Volatility is formally calculated as the standard deviation of returns — a statistical way of saying how far typical daily moves stray from the average. A higher number means wilder swings; a lower number means calmer, steadier prices. You can explore live swings across asset classes on the commodities and stocks pages.

There are two flavors that show up in market data. Realized volatility (also called historical volatility) looks backward — it measures the actual swings that already happened over a set window, say the past 30 days. Implied volatility looks forward — it is extracted from the price of options contracts, reflecting what traders are collectively paying to hedge against future swings. When options are expensive, implied volatility is high; when they are cheap, it is low.

A simple example: suppose a stock closes at $100 on Monday. If it swings between $95 and $105 every day that week, its realized volatility will be much higher than a stock that barely moves between $99 and $101. Neither level is inherently good or bad — volatility is simply the measurement of movement.

A common confusion is treating volatility as directional. It is not. A market can be highly volatile while falling, rising, or doing both in the same week. For a deeper look at how volatility shapes market behavior, see the guide What Is Volatility.