Does number of traders affect volatility?

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Does number of traders affect volatility?

The number of traders is increasing more than before as more people are generally becoming more interested in ways to become more financially independent and as thus in search of skills like trading.
Does the number of traders directly affect the volatility of the market? If it does, can we assume that trading was easier before with less traders (less volatility) than now when there are more traders, and the market more volatile?

adrian ondachchi Answered question May 17, 2024
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Theoretically and generally, yes it does affect volatility. But the factors affecting volatility are definitely more than just # of traders, namely — liquidity, trading volume, etc. It’s all those factors altogether. So no, we can’t make an accurate assumption based on a single metric.

Bhanuka Harischandra Answered question May 17, 2024
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