Stock market basics · Intermediate

Volatility Explained

A 1-minute lesson from the MarketPro academy, one of 18 in stock market basics.

Last reviewed by the MarketPro research desk · Editorial policy

Short answer

Volatility describes how much and how quickly a stock's price moves over a given period. A highly volatile stock can swing sharply in either direction within a short time, while a low-volatility stock tends to move more gradually.

Volatility describes how much and how quickly a stock's price moves over a given period. A highly volatile stock can swing sharply in either direction within a short time, while a low-volatility stock tends to move more gradually.

Why Volatility Happens

  • Company-specific news, such as earnings results or leadership changes, can cause sudden price swings.
  • Broader economic or geopolitical events can move entire markets, affecting many stocks at once.
  • Lower trading volume can make a stock's price more sensitive to any single buy or sell order.

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