In simple terms, volatility is the erratic up and down movements often seen on financial charts.
It’s something you may have heard fund managers talk about – they demonstrate that their fund doesn’t have the move up and down as much as the index they are trying to match or the objective return of the fund.
Over the last decade we have generally seen markets move up, there have been some big movements down, but they have recovered quickly. These recoveries are what traders and fund managers call corrections.
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