Part 21: Technical Analysis — Trading by VIX

VIX, a volatility indicator occasionally known as investor fear gauge, is a tool which reveals market opinion. Use another perspective and expect the behaviour of the majority of traders. First of all, let’s present the instrument itself to demonstrate how it functions and what values or motions are applicable.
What’s VIX
Index CBOE VIX is a sign of market volatility. Volatility suggests how fast and how much costs vary. With VTX that the last value is set using the projected volatility of options by indicator S&P 500.
High volatility happens when a cost changes quickly with a single set of dealers selling their assets along with yet another one purchasing them. On the current market, this is sometimes observed in the aftermath of significant news (in the case of forex normally following central bank sessions or fluctuations in interest rates). To the contrary, very low volatility is average for nighttime, time intervals where price movements are minimal.
VIX advancement over the current year. Since February, volatility in the marketplace has become more extreme than normal.
Trader’s interpretation of VIX
A greater value of VIX means greater volatility and thus higher doubt. When are dealers unsure and nervous? Whenever there’s a danger of the collapse of this machine or at least a remarkable reduction of costs (… can you envision a dealer being nervous when earning money? . .) .
Incidentally, have you thought about the conditions long (for purchase ) or short (for sale )? It’s easy — to speculate growth is a LONG-term attempt, but drops come fast and are competitive — SHORT.
When stocks rise, it’ usually a moderate growth. Traders are calm having no reason to panic. This is because of low volatility and low VIX.
How to trade with VIX
In general, with the growing VIX, you can expect a price decline in particular in a stock market. Usually, it’s not only stock markets; forex, commodities, and cryptocurrencies are affected, too. Being a beginner at cryptocurrency trading you don’t know however whether doubt in a market signal for cryptocurrencies bad or good times.
Most of you understand that if markets are volatile, traders have a tendency to resort to gold to conserve the worth of an investment. Bitcoin is known as digital gold and litecoin silver. Does this imply that cryptocurrencies behave equally? As a sort of worth preserver, will they develop? At this time, nobody can answer this query. Cryptocurrency fans see everything in vivid colours but you’d also find a lot of skeptics. Everything that you could do is to wait and see exactly what the marketplace is going to do.
In general, high worth of VIX index mean a possible hazard and unpredictable price moves, while low VIX a steady tendency. However, as you understand every market has two sides that means a possible hazard could be turned into a strength.
I would not ever use VIX as the primary index for selling my resources. Personally, I view it as a match offering a different perspective of the marketplace but not the vital tool for trading. Asking me if it’s possible, I will reply it appears it is. But I am not going to offer you some particular trading plan based on VTX.
Anyhow, I think that testing VIX is logical. Who knowsit might prove to be the final bit in your mystery — your Forex trading plan.
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