The VIX & The Tides

-
The CBOE Volatility Index (VIX) is a market index that represents the market's expectation of 30-day forward-looking volatility. A high VIX high volatility and a low VIX = low volatility. In 10KTrades terminology, VIX can be illustrated by "wind speed (knots)" or by the types of Tides.

For some perspective, back in December when the market was very volatile, the VIX rose to 36.20. Since then the markets have been much calmer and the VIX has been around 13.

When the VIX is high expect volatility (high winds and turbulent seas) and trade accordingly. Likewise a low VIX might offer a little more stability so adjust your Captain's Log accordingly.

Trading Tide Levels (at the time of this post):
Subscribe to 10KT Newsletter          Learn More About 10KT
Facebook
Twitter

This is for informational purposes only and the information provided does not encompass all possible or probable outcomes and nothing posted here is an indication of future results. Nothing in this blog is a guarantee or promise of future investment returns and investing in stocks or bonds carries risks including losing your entire investment. I do not recommend, advocate or endorse any third-party links, resources or advertisements of any kind. Any investment decisions are recommended to be in conjunction with a Certified Financial Planner, a comprehensive and personal financial plan and all other components that make up your own financial situation.

Comments

Post a Comment

Popular posts from this blog

Introduction to 10KTrades.com

-
Welcome to 10KTrades.com . As the name implies, I've executed nearly 10,000 transactions during my trading career. During my 21 years of trading, I've won some (60%) and I've lost some (40%) and I hope I can share my experiences, regardless of the outcome, to educate you on some of the things I've learned over the years. As you follow my blog, you'll see how much I love the water and I often will use boating terms as metaphors for trading. If you follow along you'll need to interpret the sea conditions, nautical charts and weather forecasts and how they impact my heading and course. Here are a few of the interpretations: Ticker Symbol/Stock Position = "Boat" or ship or vessel being traded. A dinghy is a small investment and a ship would be a large investment. All Ticker Symbols/Stock Positions or "Boats" = The "Fleet" Not Invested = At the dock, port or harbor Symbol Purchase = Leaving the dock or port as in set sail, crui
Read more

STOP-LOSS

-
Arguably one of the most important and also painful lessons I've learned is the psychology during losing trades versus winning trades and how critical it is to use a stop-loss in order to limit a loss. A stop-loss is a price you set prior to initiating a trade and if your trade hits that price you are OUT. Here is an example: Entry Price: $10.00 Exit Price "Stop-Gain": $10.70 Stop-Loss: $9.30 Interestingly, I almost always hit my "stop-gain" points. Like clockwork, I eagerly sell wins at or near my target exit price when I am winning (in the above example, I'd sell at $10.70 in a heartbeat). But for some reason, selling losses is another story - I sometimes hold them forever to avoid taking the loss! In the above example, the price could get down to $9.00 and I'd think to myself "well, I might as well hold it, how much worse can it get?" or "I don't want to sell it now because as soon as I sell it it is going to rebound and I&#
Read more

Rip Tide Season

-
We are now entering  Rip Tide  Season. Rip Tide : A strong flow either way.  Rip Tides  happen when there is news or earning about a stock, or political or economic unrest, and during this time a stock can move violently in one direction or another. A classic  Rip Tide  example is  BBBY  (Bed Bath & Beyond) Trade #41: 12/24/18  Low Tide  $10.46 04/10/19  High Tide  $19.57 (earnings released after close) 04/11/19  Rip Tide  opening price of $17.08 08/15/19  Low Tide  $7.31 (127 days of pain if no STOP-LOSS ) 10/15/19 $12.36 As you can see,  BBBY  Trade #41 has been a decent trade as long as you avoided the  Rip Tide  near $19.57. Fair winds and following seas! Trading Tide Levels : Receding High Tide  ( S&P  falling from an all-time high of 3027.98) Spring Tide  ( VIX  rising to 22.04) Subscribe to 10KT Newsletter            Learn More About 10KT Facebook Twitter This is for informational purposes only and the information provided does not encompass all
Read more