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Volatility Impact Metrics Meaning

Volatility impact metrics measure how fluctuations in asset prices affect the cost and quality of trade execution. In highly volatile markets, bid-ask spreads widen, slippage increases, and the risk of adverse price movements rises.

Metrics such as the volatility cost ratio (which compares the volatility-adjusted cost of trading to a benchmark) help traders understand the trade-off between timing and execution. Algorithms may incorporate volatility impact metrics to decide when to split orders, adjust order types, or pause trading until volatility subsides.

For crypto traders, monitoring volatility impact is essential for controlling transaction costs, especially on decentralised exchanges with fragmented liquidity.

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Finery Markets BVI Limited (“Finery Markets”) provides software, technology infrastructure, and related Information and Communication Technology (ICT) services on a Software-as-a-Service (“SaaS”) basis. Finery Markets acts solely as a software vendor and does not operate a trading platform, does not intermediate, match, execute, clear, or settle transactions, and does not engage in any activities that would require regulatory authorisation under applicable laws.

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