Two limit orders, one above and one below the last transaction's price, await the price movement of the stock or commodity and the eventual filling of an order. With the order filled, the remaining limit order is canceled and two new limit orders are developed. This process is repeated over and over until a cycle is completed. Each stock or commodity has a volatility, or trading range, over time. The measurement of volatility tells us what's hot and what's not.
Volatility is calculated as high less low divided by close over time.
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