VOLATILITY INDEX TRADING STRATEGY AND PREDICTIVE SIGNALS
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The Volatility Index CBOE:VIX is a calculated indicator that reflects the expectations of market participants regarding the volatility of quotations of a particular exchange asset.
Simply put, it is a yardstick or indicator of the sentiment of traders that reign in the market. Such an index is calculated based on the volatility of the current option prices for the financial instrument under study.
When the majority of traders calmly perceives the stock market situation, then such an index falls to the minimum values. And vice versa. If the market is in panic, investors expect an increase in volatility , then this indicator rises to the highs.
It is useful to add the signals of the Volatility Index CBOE:VIX indicator to the existing trading system, this will strengthen the trading system and clarify the entry points to trading positions, and, as a result, increase
the profitability of a trading strategy.
We present to your attention an Indicator and Strategy specially developed for predicting the Volatility Index CBOE:VIX . The strategy was tested on different timeframes and showed promising results:
High profit factor with a fairly low drawdown ~ 13%.
The strategy is based on a combination of indicators: Moving Average, RSI and MACD .
Also included in the strategy parameters is the time of trading sessions: Lindon and New-York.
The strategy has Stop-Loss and Take-Profit, which can be changed in the strategy parameters and optimized profit for different time frames.
The strategy can be used to trade the volatility index on different time frames. This strategy showed the best results for the following
timeframes: 2H, 3H, 4H, 1D.
Also, as follows from the definition of the very concept of the Volatility Index, the buy / sell signals of this script will help predict (forecast) the expectations of market participants and help
in making trading decisions on other trading assets.
Simply put, it is a yardstick or indicator of the sentiment of traders that reign in the market. Such an index is calculated based on the volatility of the current option prices for the financial instrument under study.
When the majority of traders calmly perceives the stock market situation, then such an index falls to the minimum values. And vice versa. If the market is in panic, investors expect an increase in volatility , then this indicator rises to the highs.
It is useful to add the signals of the Volatility Index CBOE:VIX indicator to the existing trading system, this will strengthen the trading system and clarify the entry points to trading positions, and, as a result, increase
the profitability of a trading strategy.
We present to your attention an Indicator and Strategy specially developed for predicting the Volatility Index CBOE:VIX . The strategy was tested on different timeframes and showed promising results:
High profit factor with a fairly low drawdown ~ 13%.
The strategy is based on a combination of indicators: Moving Average, RSI and MACD .
Also included in the strategy parameters is the time of trading sessions: Lindon and New-York.
The strategy has Stop-Loss and Take-Profit, which can be changed in the strategy parameters and optimized profit for different time frames.
The strategy can be used to trade the volatility index on different time frames. This strategy showed the best results for the following
timeframes: 2H, 3H, 4H, 1D.
Also, as follows from the definition of the very concept of the Volatility Index, the buy / sell signals of this script will help predict (forecast) the expectations of market participants and help
in making trading decisions on other trading assets.
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