GSterlingTrader
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INTRODUCTION TO VOLATILITY INDEX TRADING
What is the 'VIX - CBOE Volatility Index'
(Investopedia definition):
The Volatility Index, or VIX, is an index created by the Chicago Board Options Exchange (CBOE), which shows the market's expectation of 30-day volatility. It is constructed using the implied volatilities on S&P 500 index options. This volatility is meant to be forward looking, is calculated from both calls and puts, and is a widely used measure of market risk. The VIX is often referred to as the "investor fear gauge." Fear, volatility, and the index move up when stock prices are falling and investors are fearful. The index, volatility, and fear decline when stock prices are rising.
Volatility indices from binary.com
Volatility indices from binary.com are simulated. They use randomly generated numbers to reflect real financial market behavior. According to binary.com, the random numbers are generated by a computer programme. For transparency issues, binary.com is unable to influence or predict which numbers will be generated. In other words, due to broker regulations, binary.com cannot game the market.
Different types of Volatility Indices offered by binary.com
The Volatility INDICES offered are 10/25/50/75/100 The numbers indicate the level of volatility in the various indices markets. The volatility index 10 is the least volatile and the volatility index 100 is the most volatile of these. In addition, there are High Frequency volatility indices 10, 50 and 100. These move 4x (Four Times) faster than the corresponding volatility indices. For example, HF 10 moves 4 ticks faster than volatility index 10.
How to open a volatility indices account on binary.com
First you need to open a binary.com account here, www.binary.com DOWNLOAD MT5 AND LINK YOUR ACCOUNT.
Why be interested in trading volatility indices like forex (as CFD’s) You may be wondering why you need to bother yourself trading these volatility indices like forex when you can simply trade the real thing i.e. currency pairs. The following reasons in my view make volatility indices trading attractive.
1.VIX’s is not affected by fundamentals. (minus one problem) VIX mimic the behavior of financial markets but since they are not like currencies, they are not affected by fundamentals like interest rates, retail sales, CPI and NFP. If you have been trading forex long enough, you would know that fundamentals drive market crazy.
2. You can trade VIX 24/7/365 Volatility indices are not only open during working hours like forex, they are available all year round including weekends and public holidays, this makes them very attractive.
3.Volatility indices have very low spreads (Almost as no spread) Spreads are a major cost in forex trading, it even gets trickier when consider the fact that different brokers have different spreads, this means that if you choose a broker with high spreads, your trading costs will shoot up. Additionally, brokers manipulate the spreads and make stop hunts using the spreads during news releases. VIX has fixed spreads, very low 0.1pip in some instances.
4. Volatility indices can be traded with price action.
This is best of all these advantages for me, I believe price action simplifies the trading process,
5. Margin requirements are less as compared to other financial instrument (forex, crypto, stock’s and indices).
What is the 'VIX - CBOE Volatility Index'
(Investopedia definition):
The Volatility Index, or VIX, is an index created by the Chicago Board Options Exchange (CBOE), which shows the market's expectation of 30-day volatility. It is constructed using the implied volatilities on S&P 500 index options. This volatility is meant to be forward looking, is calculated from both calls and puts, and is a widely used measure of market risk. The VIX is often referred to as the "investor fear gauge." Fear, volatility, and the index move up when stock prices are falling and investors are fearful. The index, volatility, and fear decline when stock prices are rising.
Volatility indices from binary.com
Volatility indices from binary.com are simulated. They use randomly generated numbers to reflect real financial market behavior. According to binary.com, the random numbers are generated by a computer programme. For transparency issues, binary.com is unable to influence or predict which numbers will be generated. In other words, due to broker regulations, binary.com cannot game the market.
Different types of Volatility Indices offered by binary.com
The Volatility INDICES offered are 10/25/50/75/100 The numbers indicate the level of volatility in the various indices markets. The volatility index 10 is the least volatile and the volatility index 100 is the most volatile of these. In addition, there are High Frequency volatility indices 10, 50 and 100. These move 4x (Four Times) faster than the corresponding volatility indices. For example, HF 10 moves 4 ticks faster than volatility index 10.
How to open a volatility indices account on binary.com
First you need to open a binary.com account here, www.binary.com DOWNLOAD MT5 AND LINK YOUR ACCOUNT.
Why be interested in trading volatility indices like forex (as CFD’s) You may be wondering why you need to bother yourself trading these volatility indices like forex when you can simply trade the real thing i.e. currency pairs. The following reasons in my view make volatility indices trading attractive.
1.VIX’s is not affected by fundamentals. (minus one problem) VIX mimic the behavior of financial markets but since they are not like currencies, they are not affected by fundamentals like interest rates, retail sales, CPI and NFP. If you have been trading forex long enough, you would know that fundamentals drive market crazy.
2. You can trade VIX 24/7/365 Volatility indices are not only open during working hours like forex, they are available all year round including weekends and public holidays, this makes them very attractive.
3.Volatility indices have very low spreads (Almost as no spread) Spreads are a major cost in forex trading, it even gets trickier when consider the fact that different brokers have different spreads, this means that if you choose a broker with high spreads, your trading costs will shoot up. Additionally, brokers manipulate the spreads and make stop hunts using the spreads during news releases. VIX has fixed spreads, very low 0.1pip in some instances.
4. Volatility indices can be traded with price action.
This is best of all these advantages for me, I believe price action simplifies the trading process,
5. Margin requirements are less as compared to other financial instrument (forex, crypto, stock’s and indices).
