As an execution-only trader, volatility is one of the main elements to look out for. Of course, there also needs to be liquidity to ensure you can get in and out of stocks in decent size, but volatility is the key to trading. So, what would you guess if we were to ask you how volatile the FTSE 100 had been over the last decade?
The last decade has been eventful
Over the last decade, we have experienced the aftermath of the 2007/8 US mortgage crisis, the Brexit vote, and Covid. In all honesty, you will probably assume that these were some of the most volatile times in the history of the UK stock market – as well as globally. However, the range of volatility is interesting and may surprise you.
Trade execution is the key
Whether you have relatively low or high volatility, the timing of your trade execution is critical. Considering that some traders will deal relatively large on a relatively small turn, thelast decade has given ample opportunity for execution-onlytraders. So, what were the most volatile years for the FTSE 100 over the last decade?
Summary of the table below
It will come as no surprise to those who follow the FTSE 100 to learn that 2020 was by far and away the most volatile in recent times. The returns amongst execution-only traders will vary enormously, and unfortunately, some will have suffered huge losses. When we look at trade execution, we look at both long and short positions that expand the number of trading opportunities.
Some of the key points from the table below are as follows:-
• In the immediate aftermath of the first discovery of Covid, 2020, the market variation from low to high with a staggering 56.97%.
• In 2016 we saw the Brexit vote, which caused some concern amongst investors but had many execution-onlytraders rubbing their hands. Volatility during this year was 29.88%.
• During the last decade, the least volatile year was 2017 with a swing of just 8.61% between the FTSE 100 low and 12-month high.
• The simple average for the year came out at 21.90%, which is higher than in seven of the last ten years. This figure is impacted by the relative highs of 2016 and 2020.
• If we look at the low and high over the last decade, the variation is 51.13% which is not exceptionally high for ten years.
If you would like a more in-depth look at the volatility of the FTSE 100 over the last decade, all of the information is listed below.
|
Date |
High/Low |
Variation from low % |
|
|
|
|
|
12/29/21 |
7457.14 |
16.57 |
|
01/29/21 |
6397.24 |
|
|
|
|
|
|
01/17/20 |
7689.67 |
56.97 |
|
03/16/20 |
4898.79 |
|
|
|
|
|
|
07/30/19 |
7727.49 |
17.09 |
|
01/02/19 |
6599.48 |
|
|
|
|
|
|
05/22/18 |
7903.5 |
20.91 |
|
12/27/18 |
6536.53 |
|
|
|
|
|
|
12/29/17 |
7697.62 |
8.61 |
|
01/02/17 |
7087.54 |
|
|
|
|
|
|
12/30/16 |
7142.83 |
29.88 |
|
02/11/16 |
5499.51 |
|
|
|
|
|
|
04/27/15 |
7122.74 |
23.48 |
|
08/24/15 |
5768.22 |
|
|
|
|
|
|
09/04/14 |
6904.86 |
13.70 |
|
10/16/14 |
6072.68 |
|
|
|
|
|
|
05/22/13 |
6875.62 |
17.06 |
|
01/01/13 |
5873.43 |
|
|
|
|
|
|
12/27/12 |
5997.04 |
14.67 |
|
06/05/12 |
5229.76 |
|
|
|
|
|
|
Average Annual Variation |
|
21.90 |
|
|
|
|
|
Figures 2012/21 |
|
|
|
|
|
|
|
05/22/18 |
7903.5 |
51.13 |
|
06/05/2012 |
5229.76 |
|
|
|
|
|
Source:- uk.finance.yahoo.com
Developments over the last decade
Undoubtedly, the number of execution-only traders has increased dramatically over the last decade, with yet another significant rise as a consequence of the Covid pandemic. However, developments in low latency execution services have allowed investors to take more control over the timing of their trade execution. In addition, dealing directly with markets ensures that execution-only traders can react much quicker, potentially increasing the opportunities to make money.
Summary
While there has been considerable variation in the highs and lows of the FTSE 100 on an annual basis, going back ten years, there would have been even greater volatility for individual share prices. The ongoing development of low latency execution-only trading platforms has benefited traders, allowing them to tap into emerging market trends much quicker.
It is a little surprising to learn that over the last decade, the maximum intraday high was only 51% above the low, registered on 6 May 2012. But, then again, we have been through some challenging times!