Hi can someone explain volatility with example, I understand what it kinda means but find it hard to implement in reality. Like for example if btc volatility is 4% does that means it goes up and down 4%? Everywhere i find it shows formulas which i am not interested in, I am interested in how I can implement it in my trading decisions.
First, understand what this means properly and correctly and where it leads. because if I'm not wrong In the context of trading, volatility is often considered as one of the risk considerations for the uncertainty associated with the investment that we are running, if you already understand, then you play.The easy explanation as suggested by @Darker45 means what if you are a current trader with a low risk profile, you may want to avoid assets that have high volatility, because large price fluctuations can result in large losses and vice versa, if you are a trader with a high risk profile, high volatility is a potential opportunity for greater profits for your trading decisions.
The same thing applies to users with high-risk profiles that are trading either for short-term or long-term, they need to choose assets accordingly after determining the level of volatility they carry. A lot of traders don't look at such metrics before making trades which becomes an issue later on.
But after all, assets with high volatility will provide faster returns because the set price targets are quickly achieved. Although using a long term strategy a fixed price target is set, if it is reached first it is good luck. The most suitable asset for crypto users and the safest is Bitcoin, it will be better for the long term with moderate volatility. We will see Bitcoin reach ATH again later. The more Bitcoin assets held, the more profit you will get.
