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Volatility is only useful in judging what you are
trading. In any trade there are two types of risk. the initial risk
your system provides and volatility risk. the object of trading is to keep
the number of risks to a minimum. If the volatility risk is greater then
your initial trade risk you shouldn't take the trade. If you are in a trade and
the volatility risk increases one should reduce size so that it is commensurate
with the initial trade risk. They built Vegas with a 2% edge so you don't
have to trade with increased either.
The indexes can move up or down
on high or low volatility. This overlay shows that it moves inversely on
the INDU. Will the turn come with a vix of 14, 18, 35 or any other number
as a high or low. This you can't predict. The VIX does seem to move
with a certain cyclical pattern.
If the VIX is a confirming indicator for you
and it works, then continue to use it. Anything that is
successful and is adding to a degree of predictability is an asset to
any system.
Have a good week end. Ira.
----- Original Message -----
Sent: Friday, September 16, 2005 10:06
AM
Subject: Re: [RT] Vix
I don't think i would know how to trade the vix,
fading volatilty maybe, but i believe that strategy has been discredited
.
but would you not see it moving inversly to the
equity indices?
and my use here is based on the movement of
Clyde's hurst bands, suggesting that a market, the vix in this case, has
moved outside what might be its "normal" range", a confirming indicator when
it moves back into the range.
----- Original Message -----
Sent: Friday, September 16, 2005 11:53
AM
Subject: Re: [RT] Vix
I am a little confused here. Has anyone
ever made any money trading the VIX? In the 70s and 80s the VIX ranged
between 11 and 18. The extremes at the time. Then the extremes
changed and one was looking in the 30s and 40s. Still no one that I
know of ever made a dime trading the VIX.
A lot of people have made a lot of money
trading the indexes with the vix at 11, 18, 25 and so on. Does anyone
know how the VIX is calculated? If they did, I doubt that they would
rely upon it as much as they seem to.
Ira.
----- Original Message -----
Sent: Friday, September 16, 2005 8:17
AM
Subject: [RT] Vix
vix has been bouncing the outside of the
channel to the other - some thing different about his options
expiration?
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