Volatility is essentially the rapid oscillation above and below a certain mean. When there is a great deal of variation in the price of a security, particularly over short periods of time, it is considered to be experiencing volatility.
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Velocity is a measure of the rate at which an asset’s price changes. It is useful for analysts looking for potential points of reversal.
Volume weighted average price (VWAP) is the weighted average execution price for a given trade based upon multi-tiered levels of liquidity, with each tier having a corresponding price and volume.
This method of execution allows the user trading larger trade sizes to sweep through the tiers and execute with all available prices throughout the various tiers until the order is filled or until all liquidity has been exhausted.
|Tier||Size||Bid Price||Offer Price|
Given the above ladder a buy trade of 3.5 million would execute through the top 3 price levels (starting at Tier 1) as follows:
- 500,000 at 1.3235
- 1,000,000 at 1.3237
- 2,000,000 at 1.32375
The average price for the total amount is calculated at an average price of 1.3237.
Calculation: ((500,000/3,500,000)*1.3235) + ((1,000,000/3,500,000)*1.3237) + ((2,000,000/3,500,000)*1.32375) = 1.3237
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Leveraged trading in forex, derivatives, precious metals, CFDs or other off-exchange products on margin carries a high level of risk to your capital. You do not own, or have any rights to, the underlying assets. Trading is not suitable for everyone and may result in losses greater than your deposits. You should only trade with money you can afford to lose. Past performance is no guarantee of future performance and tax laws may be subject to change. 31FX is not a financial advisor and all services are provided on an execution only basis. Please consider our Risk Disclosure Statement and legal documentation to ensure that you fully understand the risks involved in light of your personal circumstances before you decide whether to acquire our services. We encourage you to seek independent advice if necessary. 31FX is a registered brand name of JRV Market Ltd with registered address, 3rd Floor J&C Building, PO BOX 362, Road Town, Tortola, BVI VG1110