13. Volatility—Marking Risk within the Trend
The term volatility describes unpredictable price movement, fast directional swings, and overall risk involved with investing. Volatility is price uncertainty.
Prices can and do move even when volatility is low, and volatility does not forecast or predict price movement in either direction. It is a mistake to equate volatility (market risk) with price movement or its symptoms. In times of high volatility, risks are greater, but so is profit potential. Depending on whether you are tracking a primary or a secondary trend, volatility in the trend itself reveals a lot. For a primary trend, increasing volatility can forecast the end of the trend; and for a secondary trend, volatility often forecasts a quick ...
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