Volatility reflects the way that investors feel at a given moment. Increased market volatility is usually caused by economic or policy factors, including changes in other markets, interest rate hikes, and the Fed’s current monetary policy. Political instability and other global events, like a pandemic or a war, can also lead to market volatility.

Factors such as market sentiments, geopolitical developments, market cycles, company performance, and monetary policy changes can induce market volatility.

Investors must understand the factors affecting volatility, including economic indicators, market sentiment, political events, and company-specific factors. Calculating volatility using standard deviation, ATR, and the VIX aids in decision-making. Diversification, hedging, and risk management strategies can help mitigate volatility's effects.