What is Foreign Exchange Market Volatility?

Each of the currency pairs traded in the FOREX market, is some volatility, or variation in prices during each trading session. Volatility measures the extent to which changing prices for a specified period of time. Vysokovolatilnye markets are potentially more profitable, but also increased risk, such markets are interesting for short-term traders. Long-term, more conservative traders try to trade on the less mobile markets. If during the week of spot exchange rate moved within plus or minus 2-3% of the closing prices Friday, the lowest volatility. And if it fell by 15%, it grew by 15%, the volatility - is very high.

Volatility has several features: cyclicity, consistency and desire to secondary.


Volatility tends to cycle to work, grow to a peak and then decreasing until it reaches the lower limit, and the process repeats.

The permanence of volatility - this is its ability to continue from one day to the next, assuming that the one that exists today, is likely to exist tomorrow.

Go back to the average (normal) level, after reaching a high or low extreme - yet another remarkable ability volatility. If the market is extremely high volatility, it is likely to revert back to the mean, ie, falls to a normal level.


Traders on the foreign exchange market Forex volatility could evaluate using indicator ATR. ATR indicator is the number of standard indicators MetaTrader4 platform and is often used to determine the value of Stop Loss orders. Indicator ATR often reaches high values after a rapid fall in prices due to panic selling. Low values correspond to the indicator is often lengthy periods of horizontal movement, which occur at market tops and at the time of consolidation. The higher value of the indicator ATR, the higher the probability of a change of trend, the lower its value, the weaker direction of the trend.