BlockchainIntermediate#Metrics#Risk
Volatility
V
Definition
The extent to which an asset's price or returns varied over a stated period. A volatility figure is meaningful only with its asset, data, measurement window, and method.
Source reviewed
- Investor.gov: What is Risk? opens in a new tab
Supports: Explains that market prices fluctuate in both directions and treats that variation as investment risk rather than a return promise.
- SEC filing: realized volatility methodology example opens in a new tab
Supports: Shows that realized volatility depends on a stated measurement period and standard-deviation calculation, and is historical rather than an indicator of future performance.
Concept Diagram
Key Takeaways
1
A volatility figure needs a stated asset, data source, period, and calculation method
2
Realized volatility summarizes selected past variation; it does not forecast direction, timing, or magnitude
3
Higher variation can widen gains and losses and can matter for liquidity, collateral, and leverage rules
4
Compare the same return interval, venue methodology, time window, currency, and annualization convention
Practical Example
A dashboard labels a figure as 30-day annualized realized volatility for an identified market-data source. Before comparing it with another figure, a user checks whether both use the same asset, return frequency, data window, and annualization. They do not infer the next price direction from either result.
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Related Terms
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Stop LossAn order instruction that activates when a specified trigger is reached. Its behavior, trigger source, availability, and execution price depend on the venue and order type; it cannot guarantee a maximum loss.
Macro
Risk-On / Risk-OffInformal market shorthand for periods when investors appear more willing to hold risky assets (risk-on) or more focused on reducing risk (risk-off). It is a description, not a standardized regime or a forecast.
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LiquidationA contract- or platform-defined process that closes or transfers a leveraged position when collateral no longer meets its maintenance requirement. The trigger, price source, penalties, partial-close rules, and loss outcome vary by product and venue.
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SlippageThe difference between a quoted or expected trade result and the result that can execute under the protocol's state and limits.
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