Thursday, 16 April 2015

Explaining Volatility in Financial Markets

The prices of a stock in a market may be up today, but the next thing you know within five minutes they are down again. This up and down game is always there in financial market and that is exactly what is termed as stock market volatility.

In a layman’s language, it would be better to understand with the example of how car insurance premiums go up if the likelihood of risk is higher. It could be based on person’s poor driving record or based on the fact that the person resides in an area where number of thefts is high.

There are some who say that the term volatility is just a polite way of translating investor’s nervousness. While volatility increases, the chances of problematic trading also on increasing trend. There are some analysts who feel that volatility can be indicative of rebound and make room for plenty of money making strategies.

Since volatility increases chances of risky trading, that is why investors and traders implement risk management systems (software) in order to cut down on the degree of risk or to at least mitigate its impact.

Dragon Holdings AG:

This company is located in Germany and designs algorithms for algo trading. It also designs risk management systems that are implemented by investment banks, traders, market makers and individual investors.

Link to company’s website for more updates and information: