Volatility
Volatility is how much prices move up and down over time.
Why this matters
Big swings can trigger emotional decisions, even when long-term fundamentals have not changed.
Simple example
An investment that moves +3% and -3% frequently is more volatile than one moving +0.5% and -0.5%.
Common mistakes
- Treating volatility and permanent loss as the same thing.
- Panic selling after normal short-term price moves.
- Taking high volatility without a clear long-term reason.