Trading & Markets
Volatility
How much and how fast price moves. High volatility widens ranges, targets, stops, and risk all at once; low volatility compresses them.
In plain English
Volatility sets the scale for everything in a session: a 10 point ES stop is generous on a quiet day and instantly harvested on a CPI morning. Traders track it through average range, the VIX for equities, and simply the size of recent candles.
Prop risk math must breathe with it: fixed-size trading across volatility regimes is how quiet-week habits blow up on the first fast day. Many funded traders halve size when realized volatility doubles, keeping dollar risk near constant against the daily loss limit.
- ES averages a 40 point daily range for a month, then prints 120 point ranges around a Fed meeting.
- The same 3 contract habit tripled its risk without a single decision.