Image may be NSFW.
Clik here to view.
In addition to fluctuations, there is one more called volatility. What exactly is the volatility that? And what about its effect on the market if volatility increases or weakened? This article will review more deeply about price volatility. Let us examine his review below.
The money market is a market that traded short-term credit instrument (typically less than one year), which is a means of raising funds and the investment community. Financial markets are often called primary market liquidity. Because funds are bought and sold is not done in a certain place. The market can also be called as an abstract market.
Is Volatility is it?
Basically volatility or market turmoil has a role in the return of investment. If the result is usually a huge advantage to have a high risk anyway, is commonly referred to as the Investment profile. Each investment profile investors have different, among other things: conservative, moderate and aggressive.
Volatility is a large gap between the fluctuations / ups and downs of stock prices or foreign exchange. Prices were high rise rapidly, then suddenly dropped in quickly, called the volatility is high. Examples of high volatility stocks are ADES, ASGR, and several layers of shares 3. While the price of foreign exchange usually found on GBP / USD, GBP / JPY, or sometimes EUR / USD.
Usually in calculating the state up and down, we will also take into account the margin. How strong is the hold transaction accounts before achieving profit? Well here are three types of margins are:
1. Initial Margin
Its large initial margin depends on the contract price fluctuations and volatility.
2. Variation margin
Represents variation margin level corresponding to the level of price volatility.
3. Maintenance margin
Margin levels are slightly below the initial margin, which serves as a safety.
Both stock / foreign exchange volatility is high or low (muted) both are equally beneficial, provided using different strategies. Prices volatility is high suitable for short-term traders, and traders tend to be aggressive. For its high volatility trading, traders should have been trained and stable in the psychology of trading. Traders must be disciplined and have planning before trading.
Volatility also influence the effect of leverage that we can. Suppose that traders use leverage large or super-large to widen its leverage. Because of the super leverage (hyper leverage), character and passion trader becomes vital role.
If the character is good, greed can be controlled. But, if full of guile and greedy, be careful when volatility increases. At the time the stronger volatility in the market, few people understood its transactions and resulting instrument systems and procedures or internal control weak. Note the transaction security before trading.