Risk
Volatility
The degree of variation in a security's price over time. Higher volatility means larger and more frequent price swings.
Example
A stock that regularly moves 5% in a single day is far more volatile than one that typically moves 0.5% a day, even if both end up at the same price a year later.
Common Misconception
Volatility measures the size of price swings, not the direction — a stock can be highly volatile while trending upward overall, so "volatile" doesn't automatically mean "risky" in the sense of losing money.
Why It Matters
Higher volatility usually means a bumpier ride to a given return, which matters most for money you might need on a shorter timeline, where a bad-timing sale during a dip could lock in a loss.