Posts Tagged Under: VIX

The final BREXIT week. How to trade BREXIT and what does it mean?

 

This trading week, all eyes will be on Thursday’s BREXIT referendum and financial players and investors from all around the world will closely watch the financial markets. We may see a major impact on price behavior across multiple asset classes due to the BREXIT poll, before and after the actual vote on the 23rd, when investors and traders position themselves. The opinions below are of Optimus Futures, LLC and are shared for your convenience and do not constitute a trading advice.  We encourage you to read the note we have placed in our forum addressing the issues that may be associated with “Brexit” and trading around this period.  Please Click here: Preparing for Brexit

 

What is BREXIT?

BREXIT stands for “British Exit” and it means that Britain is considering and voting on leaving the European Union. The reason behind the poll is that many British people believe that it will be better

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The difference between Momentum and Volatility, and how to use it in your trading

 

This is the opinion of Optimus Futures.

The misunderstandings and misconceptions between volatility and momentum can lead to expensive trading mistakes and result in a flawed chart, market analysis, and trading decisions.

Volatility and momentum are two fundamentally different things. We will explore the differences between the concepts, how to measure volatility and momentum, and how to use them for effective trading decisions.

 

What is volatility?

Volatility describes how much price fluctuates around a mean. If you would use a moving average and see prices going back and forth around the moving average, markets are in a high volatility environment. Furthermore, if candlesticks have relatively long candle shadows compared to the candle body, it also signals a volatile market.

Thus, volatility is also often referred to as a risk indicator because high price fluctuations can signal indecision in the markets, and the powers between buyers and sellers are constantly shifting.

 

What is momentum?

To a certain degree,

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What does volatility really mean for you as a trader?

 

Volatility and Trading

Everyone is always talking about volatility. But how does it really affect your trading and how can you use it to your advantage? If you are stuck and not seeing the results you desire, becoming a volatility expert can potentially help you take the next step. Increasing the size of your profitable trades, avoiding stop runs during high volatility times and maximizing the win to loss potential of trades are just three examples of how volatility can benefit your trading.

The screenshot below shows why it is necessary to trade with a volatility-adjusted trading strategy. The ATR – average true range indicator – (more on that later) is plotted at the bottom and the indicator shows that price constantly shifts from low to high volatility periods. If your trading shows inconsistent results, volatility could be at the core of your problem.

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