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What is volatility?

Volatility measures how much an investment's price swings: the higher it is, the wider and more unpredictable the moves.

Technically it's the standard deviation of returns: a stock with 30% annual volatility moves far more sharply than one at 10%. It doesn't distinguish gains from losses — it measures the size of swings, not their direction.

For a long-term investor volatility is the price paid for equity returns: markets pay more than savings accounts precisely because they force you to endure swings. The famous VIX index measures the S&P 500's expected volatility and is called the "fear index".

Concrete example

In March 2020 the S&P 500 lost 34% in a month, then finished the year with a gain: whoever sold in panic turned volatility into a permanent loss.

How you see it in InsiderFlow

On InsiderFlow these concepts come alive on real data: what big funds and insiders are buying, explained every day.

Frequently asked questions

Is volatility a risk?

Only if you're forced to sell at the wrong time: that's why you should only invest money you won't need soon.

What is the VIX?

An index estimating the S&P 500's expected volatility over the next 30 days: above 30 signals fear, below 15 calm.