Here is a news flash for. Nobody in the financial media has any understanding of volatility at all – if you are surprised then you probably shouldn’t be trading. Much of the talk surrounding the issues with Greece have centred around how volatile markets have become, these statements are made without even understanding what volatility is let along whether they have become more volatile. There is a presumption ( and this is made by traders too ) that price movement or trend is volatility – it is not, the two are very distinct and to confuse the two is to confirm your status as a peanut. Consider the chart below which is of the VIX – a default standard for volatility within the US market.
The red line is the average volatility for the past decade – yep its a quick an dirty measure that is somewhat distorted by the GFC. However, excluding the GFC and just taking the last five years gives me a figure of 18.1%, so volatility at present is about average.
