I'm sure that most of you guys are exasperated about the current never-ending low volatility environment(see Figure 1) as current market conditions has become increasingly challenging. The Forex Exchange market has been in a very deep sleep for the most part of this year and swing trading opportunities have vanished away and that's one of the reasons why in current low volatility environment the Carry Trading Strategy are preferred more as it makes sense that investors who are chasing yield to rush in and park their money with high yield currencies in seek for return, you can read more about this in my previous article here: Carry Trade Returns
Before going any further we need to define "Volatility", and the way I like to look at it is from two key perspective:
  1. How many times it moves(up and down) in a given period of time --> Frequency.
  2. How faster and bold is the move-->Severity.
In this regard the best definition of volatility I found it to be:"Volatility refers to the frequency and severity with which the market price of an investment fluctuates."
Figure 1. JPMorgan global-currency volatility index.

  • Why is Volatility so Low
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