Volatility is a really common word.

If you're like me and you read the news, you'd read the word volatility in the news report at least 3 times.

And that makes a lot of sense, because of its importance.

Volatility, in terms of trading, is simply the measure of the dispersion of returns you get in your security.

In other words, how far away from your buying price the actual price will deviate.

You could call it price standard deviation, although it's more complex than that.

So how is this measured?

Usually, trading platforms should give this as a number in the top right corner of your screen.

If you've ever traded stocks, you should notice this.

But in crypto trading and Forex, we measure volume instead of volatility. Trading volume is very different from volatility, because volume simply measures how much Bitcoin(in the case of Bitcoin trading) was involved in moving the price from one point to another. It doesn't really tell you how much ROI to expect.

That said, we can still measure volatility and see its impact on our returns.

We can do this with many indicators.

There are others we could use to deduce this figure, but the simplest to use is the one I will name.

1. The Relative Strength Index

The RSI indicator is the best indicator to measure volatility, period. It is similar to the other one I will mention, but I personally use this one.

It is graduated from 0-100, with major points being between 30 and 70.

When the price ranges between 50 and 30, it is a pretty good time to buy.

If it falls below 25 however, it might mean that a turn to the downside is about to occur. So it won't be wise to buy then.

On the flip side though, if it is between 50 and 75, it's generally a hood time to sell. However once again, if price exceeds 80, it is still a great time to sell, but opening more long positions at that point is ill advised, because it might signify overbought conditions, which usually leads to a downtrend.

This indicator is usually called an oscillator, because price is bound between two levels, and oscillates between those two levels.

That said, those conditions I put above usually aren't immediate buy or sell signals. They need to be paired with other confirmation tools like candlesticks and other oscillators if possible.

That said, using this on your charts is a great idea, as it can further augment your analysis decisions.

Thanks for reading.