Explain volatility in stock exchange
Volatility in stock exchange refers to the degree of fluctuation or variation in the prices of individual securities or the stock market as a whole, over a certain period of time. High volatility means that the prices of stocks or the overall market are changing rapidly, while low volatility indicates that prices are more stable and less subject to sudden or significant changes.
Volatility is affected by a number of factors, including economic conditions, company performance, investor sentiment, and geopolitical events. It can also be influenced by trading activity, such as the buying and selling of large blocks of shares by institutional investors.
Investors and traders often use volatility as a key indicator of market risk and to inform their investment decisions. Higher levels of volatility may signal increased risk or uncertainty, while lower volatility may indicate a more stable investment environment.