Understanding Market Historical Volatility Over Time
The market historical volatility in the forex market has varied greatly over time. While the market saw an immense amount of volatility in the immediate aftermath of the 2008 financial crisis, over the last few years there have been periods of relative stability in the market. This has had a significant impact on currency pairs, with some periods of relative stability providing opportunities for investors to take advantage of momentum and carry trades while other periods of higher instability have been characterized by large swings in the market which require more active management and risk controls. The current market environment is one of moderate volatility, giving investors the ability to take advantage of both the potential for trend following as well as mean reversion strategies.
