Volatility indicators are tools used in financial markets to measure the degree of price fluctuations of an asset over a specific period. They help traders assess the level of risk associated with an investment, as higher volatility often indicates greater uncertainty and potential for price swings. Common examples include the Bollinger Bands and the Average True Range (ATR). These indicators can guide trading decisions by signaling potential entry and exit points. For instance, when volatility increases, it may suggest that a significant price movement is imminent, prompting traders to adjust their strategies accordingly. Understanding these indicators can enhance market analysis and improve investment outcomes.