Volatility is the measure of how much a stock price swings up or down over a given period. A high volatility means the price is changing rapidly and dramatically. In July-August, we saw high volatility in the stock market - the stock market increased from 24K to 25K. Then, it fell below 24K and jumped back again. All this in no time. Let us understand it better with an example of two stocks:

• Stock A: Stock price moves from Rs 100 to Rs 110 in one week and then back to Rs 100 the following week.
• Stock B: Price moves steadily from Rs 100 to Rs. 110 over two weeks.

In this example, Stock A is more volatile because its price fluctuates more rapidly and dramatically.

Investors should understand that high volatility can present both opportunities and risks. While it can lead to significant gains, it also increases the potential for losses. Understanding volatility is crucial for making informed investment decisions.

You can use AI for investing to find the best long term stocks that can ride even the high market volatility.