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How to tell volatility is picking up?

Updated: May 6, 2021

Show me the volatility

Findings show investors today are more receptive to volatility now comparing to 10 years ago. In the past when I raise this question "Do you prefer to have volatility?" about 70% do not welcome it. However, as investors are more well read and well informed today, more than 60% of the investors enjoy having volatility in their investment.

Doing comparison on Dow Jones' volatility between 2017 and 2018, in 2017 it's average trading range was 109 points, however this year was at 297 points, almost 2 times more or 172% increase in it's volatility.

An increase in it's daily trading range, it is also a measurement that volatility has increased, but in may not be a bad news for some investors.

For STI, we are seeing in it's volatility this year comparing to 2017. Last year average trading range was 21.81 points, this year to date was 29.77 points, an 37% increase in it's volatility.

Investing in a volatile market

If an investor is passive, means to buy a stock and to hold it forever, volatility may work against them. However, if an investor took an active stance, to be realistic with their profits and manage their risks on those under-performing stocks or assets, volatility works well for them.

Most passive investors adopt a "Relative returns" investing model and most active investors adopt an "Absolute returns" investing model.


From my findings, to have volatility works in their favour, it really begins from an investors' mindset, making changes to their investing and trading style.

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