Volatility Investing & Trading Part I

Volatility is one of the key parameters in finance : it measures the degree or variation of a trading price series over time. Even though this definition may sound fairly simple at first sight, it is the basement of a braoder approach. of volatility; indeed this word spans many ideas and theories which play a pivotal role in modern finance. A first way of apprehending volatility is through mathematics: volatility can be computed as the standard deviation of the series of price returns. When computed in such a manner, volatility is said to be "historical", insofar as the computation are based on past data, and so the level of volatility provides us with information about the past behaviou oh the price series.