Volatility: how to measure crypto price swings

Volatility describes the scale of price swings over a given period. It is most often measured by the standard deviation of returns or by the ATR (Average True Range), the average range of candles' movement. High volatility means large price swings in a short time; low volatility means a calm, narrow move.

Cryptocurrencies are usually more volatile than traditional assets, which raises the potential for both profit and loss. Volatility does not indicate direction: moves up and down count the same. It is useful when choosing the stop loss distance and position size, because the same distance can be too tight in one period and too loose in another.