In the absence of news, the markets will continue to move. This makes volatility an important market valuing tool/counter. Further, volatility is not the simplest concept to grasp, it is counter intuitive. Unlike the laws of motion that stay in place until changed by an outside force or friction, this does not apply to volatility. In some ways the market acts internally, generating its own swings, but people have a tendency to assume some sort of causation/correlation with events around the same time.

The conservation of volatility may come from the number of players/population of market participants. When prices gyrate it attracts attention. As the group of traders increases they are likely to arrive at an average price at a faster rate than the previous fewer players who kept trading (as opposed to holding positions/cash).


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