Using the VIX index as a trading indicator

Using the VIX index as a trading indicator

A Stable Market is considered when the VIX index is below 20 or 25. You can use the VIX index as a trading signal by picking up trades when then VIX index goes above these levels. Historically the Vix index would reach 20 and turn back down seldom would it reach 25. By applying good money management you could take advantage of these panic situations ad buy the S&P 500 when the VIX Index rises above 20 and turns back down the next day. Historically this has worked, but as we can see for the past thing can change in the markets. Always trade with caution.

spreadbetting-Vix-trading-indicator

spread betting SP500-trading-indicator

How I use the VIX

How I prefer to use the VIX index is more as a warning sign. I have strategies that i follow during normal market conditions which are simple repetitive actions everyday, but when the market conditions change and the markets become more volatile I will also change my style of trading, I would look for more spike trades. Change my trading style. i might feel maybe I should stay out of the market altogether. This depends from how volatile the markets are.

I hope this has been useful if you would like to share your point of view write a comment i will answer as soon as possible.

 

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