Volatility refers to the degree of variation in trading prices over a specific period, indicating how much and how quickly the price of an asset, such as a currency pair in Forex, can change. Higher volatility means larger price swings and greater uncertainty, often resulting from economic news, geopolitical events, or changes in market sentiment. Traders often measure volatility using indicators like the Average True Range (ATR) or Bollinger Bands, as it can impact risk management, position sizing, and trading strategies.