Volatility refers to the degree of variation in the price of a financial asset over a given period. High volatility means the asset's price can change dramatically in a short time, while low volatility indicates more stable prices.
In investing, volatility is often used as a measure of risk. Assets like stocks and cryptocurrencies tend to be more volatile, while bonds and savings accounts are generally less volatile. For example, if a stock's price swings between $90 and $110 within a week, it is considered highly volatile.
Volatility can be caused by various factors including economic data releases, corporate earnings reports, geopolitical events, and changes in market sentiment. While high volatility can lead to significant losses, it also presents opportunities for traders to profit from price swings.