Description:

Volatility, in the context of energy commodities trading, refers to the degree of price fluctuation or variability that occurs in the market over a certain period of time. It is a measure of the speed and magnitude at which prices change, indicating the level of risk and uncertainty associated with a particular commodity or market. Volatility is an essential concept for traders, as it directly affects their decision-making process and the potential profitability of their trades. Understanding volatility allows traders to assess the level of price risk and to incorporate that information into their trading strategies.

References:

1. Investopedia – “Volatility Definition”
Link: https://www.investopedia.com/terms/v/volatility.asp
This Investopedia article provides a comprehensive definition of volatility, including its meaning, calculation methods, and factors that influence it. Additionally, it explores the impact of volatility on financial markets and investment strategies, making it useful for gaining a broader understanding of volatility in the context of energy commodities trading.

2. CME Group – “Energy Volatility Index”
Link: https://www.cmegroup.com/trading/why-futures/welcome-to-the-volatility-market.html
The CME Group’s website provides valuable information on energy volatility through their Energy Volatility Index. This resource offers an overview of different energy market volatility products, including futures and options contracts, as well as insights into how market participants can use volatility to manage risk and develop trading strategies. The CME Group is a leading derivatives marketplace, making this source highly credible and relevant for energy commodities traders.