Volatility

Volatility measures the degree of price variation in a financial instrument over time. High volatility means prices are moving sharply and unpredictably. Low volatility indicates relative stability. Volatility is not inherently bad — it creates the price movements that traders profit from. However, unmanaged exposure to high volatility without defined risk parameters such as a stop loss can rapidly erode capital. For systematic traders, volatility is an input, not a threat. Understanding when volatility is expanding or contracting helps in timing entries, sizing positions, and setting stop losses appropriately. One-Signal incorporates volatility data — including the VIX — as part of the signal generation process. When the VIX spikes, it often reflects extreme fear in the market, which is precisely the type of sentiment extreme that One-Signal's contrarian framework is designed to identify and act on. Not financial advice.