How to Determine Volatility Chemistry - Important Information

How to Determine Volatility Chemistry - Important InformationEveryone who is interested in investing should know how to determine volatility. In other words, the volatility of a particular stock is the amount of movement within the price of that stock over a period of time. Each day, stocks and shares move within a narrow range, but over longer periods of time, stocks can change by as much as five percent or more.For a stock to have high volatility, it has to go up sharply in a very short time. For stocks to remain at a certain level, there must be a sufficient supply of buyers for the stock. This means that a small number of people will drive the price up very rapidly. The volatility is a very good indicator of the overall health of the market, and how good a market is.Usually, the volatility is higher for stocks with higher dividend yields. The reason for this is that the price of stocks tends to fall when there is less liquidity, meaning that there are fewer buyers. A high-yield s tock is an excellent indicator of high volatility, and so it is likely to also be one of the highest yielding stocks around.Any time you are considering whether to buy a stock, or sell a stock, you must look at the volatility. There are two main types of volatility. The first is called cyclical volatility, which has no discernible pattern.The second is called fundamental volatility, which will fluctuate over time. Both of these volatility levels are very important in the equation of investing, because they mean that the stock prices will not go down forever. A stock can hold for years and still go up in value. You can, for example, see a loss begin to stabilize in a stock that was trading at less than $10 per share.To determine volatility, you will need to have access to information about how much cash, as well as interest, was paid out to stockholders. These figures may have been computed and published on a monthly basis. Once you have determined the average monthly payment, you wi ll need to use that number to arrive at the volatility.If you are buying a stock and want to know how much volatility it has had, you must find out from the public companies. Ask them to give you their volatility. Ask them if there have been losses in the past, and if they are willing to provide you with their volatility figure. The figures will show you how much the stock price has moved within a given period of time.