Forex Market Volatility Forex market volatility refers to the extent to which the price of a currency pair fluctuates over a given period. Volatility can create both opportunities and risks for traders, as larger price movements may lead to higher profits or losses. Factors influencing volatility include economic data releases, geopolitical events, interest rate changes, and market sentiment. Volatility is typically higher during major market events, such as: • Central bank announcements (interest rate decisions). • Economic reports (e.g., GDP, unemployment). • Geopolitical events (e.g., elections, crises). While high volatility offers opportunities for traders to capture larger price movements, it also increases risk. To manage volatility, traders often use risk management tools like stop-loss orders, position sizing, and technical analysis to better predict potential price swings and mitigate potential losses. Volatility can also vary by time of day, with the most active periods being during market session overlaps (e.g., London and New York).