Trading Concept
Volatility
A statistical measure of how much an asset's price fluctuates over a given period — higher volatility means larger and more frequent price swings.
Volatility is the raw material of trading. Without price movement, no strategy produces returns. The question is whether the volatility is large enough to be tradeable after accounting for spreads, fees, and slippage.
Historical volatility measures past price dispersion. Implied volatility (in options markets) measures the market's expectation of future dispersion. Both matter for strategy configuration. High-volatility assets produce more signals but also more false signals. Low-volatility assets produce fewer opportunities but more reliable ones.
In the botwir3 builder, volatility affects multiple components. The trend module uses volatility to set signal thresholds. The Monte Carlo module uses it as an input distribution parameter. The position sizing logic scales exposure inversely to volatility — larger positions in calm markets, smaller in turbulent ones. The gate validates all proposals against the configured band regardless of volatility, but the strategy modules use volatility to calibrate their proposals.