What is volatility on Forex?
Volatility is a statistical measure to gauge fluctuations on Forex. This term reflects a size
of changes in a security’s value for a certain time interval. Besides, it is an important financial
barometer, which determines an amount of risk for a particular deal. For instance, currency pairs
with a low volatility are less risky as their values do not fluctuate dramatically. On the contrary,
currency pairs with a high volatility require a well-grounded trading strategy.
Volatility calculator
The average volatility calculator is created to assess a price volatility of a particular currency pair
for a certain period. A trader can estimate volatility of major, exotic, and cross currency pairs. A calculation
is based on an intraday change in pips and percent according to a certain time frame from 1 to 52 weeks.
The volatility calculator helps traders evaluate the degree of their investment risks.
Why do traders need a time frame?
Traders should be aware of an average volatility for every currency pair. The calculator enables traders to
measure a standard volatility for different time frames as well as deviations from an average level. Thus,
traders can recognize a favorable period for trading. Importantly, too old data can be unimportant to make a forecast.
How to calculate volatility?
The average true range (ATR) indicator is used to measure market volatility. Please follow the formula below:
Formula: Variation = Average (Higher — Lower)
Interpretation: Variation equals an average value of a difference between the highest and lowest prices of a currency pair over a particular period.
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