What is historical volatility?
Historical volatility is a fluctuating market price, commodity or debt tool over time. It is usually expressed in the form of a percentage, with a percentage of standard deviation from the average. The higher the percentage, the more extreme the price fluctuations are. People working on financial markets, such as stock traders and bankers, use historical volatility to take intelligent financial decisions and create forecasts that can be used to predict the market. Many people use computer software that creates such collections for them, while the software is also connected to a regularly updated database that contains the latest information. Software can also be used to generate charts and graphs that can be useful for people who want to represent historical volatility.
people can look at the historical volatility of a number of time frames, sometimes comparing time frames for more information. For example, someone bY could be interested in fluctuating the price of corn over the last year, in the last hundred years and during specific periods in history, such as years when drought affected corn crop. Looking at the historical volatility over the widespread time frames, people can give people a general idea of how volatile the price is, while the study of specific time frames allows people to make useful comparison and forecasts.
In the above example of maize, he knew how prices were in the years of drought, it can be important for someone who trade futures on corn or corn. He or she will be able to buy or sell at the best price during dry or before the expected drought by examining patterns that prices tend to follow. Historical volatility does not necessarily anticipate what will happen in the future, but it can do some useful traces and someone who makes an unreasonable financial decision inThe contradiction with historical volatility will probably be criticized for it.
The ability to explore historical volatility can also provide some perspective. For example, a particular financial commodity may seem extremely volatile over a relatively short period of time, but when it is examined in connection with a larger historical context, people can see that volatility is not really unusual. On the contrary, people can also compare short and long -term volatility to identify worrying market patterns, such as extreme swings in the price, which are actually quite remarkable.