Jump to content
Sign in to follow this  

Is volatility your friend?

Recommended Posts

Are big, unpredictable swings of price up and down an 'opportunity' as far as you're concerned?

Or is such a situation more like to be a 'danger' and something to avoid taking part in?

Share this post


Link to post

@dmedin,

I am currently away on business at the moment so normally would not have responded but such was your question that I find myself tapping away on my iPhone. 

It all depends on what type of trader you are and your risk tolerance. If you are a swing trader or a shorter term trader then you may welcome such volatility. If you are a more risk averse trader or a longer term trader then it may unnecessarily stop you out of a trade.

Such assets which experience such prices moves may not fit the criteria for some trades and so they will never trade them. Others will look for such assets and welcome them.

Different traders will have different views and thoughts on this and there is no one answer that is right or wrong. Different answers will be right or wrong to different types of traders with different trading styles. 

This may not be the answer you were looking or hoping for but without carrying out some fundamental analysis as to why the asset experienced such a swing then it is hard to answer: So for example was it a Trump tweet that caused the large and sharp price swing? Or was it a significant supply and demand issue? Was there some important economic or political update which changed the dynamics and landscape for the asset? 

  • Like 1

Share this post


Link to post
25 minutes ago, dmedin said:

Are big, unpredictable swings of price up and down an 'opportunity' as far as you're concerned?

Or is such a situation more like to be a 'danger' and something to avoid taking part in?

They need to be treated with caution (catching falling knives), chasing the market can be problematic, getting filled late but just in time for the whipsaw to take you out, even with the always needed larger stop is common. Like any new news event many prefer to wait for the dust to settle, often after a spike you get a nice channel, today looks more like a flag but at some point consensus will decide direction and that will usually lead to a measured move (either direction) at least as big as the spike and far easier to get aboard.

Share this post


Link to post
Guest phil

Volatility can certainly be your friend if you're on the right side of it. 

I think the most important thing to remember on recent volatility moves such as this one is that they can come at ANY time and therefore your risk management procedures must be rock steady and absolutely geared to unknown moves. Guaranteed stops, trailing, options hedge, vol hedge. Whatever ... just keep on it.

Share this post


Link to post

Reuters headline at 2pm on 15/08/19: Futures show markets headed for sharp fall on trade war deterioration fears!

Reuters headline at 6pm on 15/08/19:  Market rallies as trade war relations improve!

 

I had a vague feeling that trading was a mug's game before, but with the passing of each day I'm starting to feel something like contempt and aversion to this stupidity.

  • Like 1

Share this post


Link to post
3 hours ago, dmedin said:

Reuters headline at 2pm on 15/08/19: Futures show markets headed for sharp fall on trade war deterioration fears!

Reuters headline at 6pm on 15/08/19:  Market rallies as trade war relations improve!

 

I had a vague feeling that trading was a mug's game before, but with the passing of each day I'm starting to feel something like contempt and aversion to this stupidity.

Newspapers (and online) are there to sell clicks and reads. Not to accurately reflect the market. 

Also things can change in that space of time! Did you see the last 2 days?!

  • Sad 1

Share this post


Link to post

I saved this recording of a webinar from a few days ago on Volatility by Chris Weston (formerly of IG). Haven't seen the whole thing yet (60 min) but looks good, covers how to use volatility as a tool to aid trading and uses insider broker info for emphasis.

How to use Realised vol, Implied vol, Risk Reversals, COT, ATRs, BBs and options positioning and lots more.

 

Share this post


Link to post
18 minutes ago, Caseynotes said:

I saved this recording of a webinar from a few days ago on Volatility by Chris Weston (formerly of IG). Haven't seen the whole thing yet (60 min) but looks good, covers how to use volatility as a tool to aid trading and uses insider broker info for emphasis.

How to use Realised vol, Implied vol, Risk Reversals, COT, ATRs, BBs and options positioning and lots more.

 

 

 

Maybe it works for the big/institutional traders ... I doubt it works for the 'retail ****'.

Edited by dmedin

Share this post


Link to post
2 minutes ago, dmedin said:

 

 

Maybe it works for the big/institutional traders ... I doubt it works for the 'retail ****'.

you haven't had time to watch it and by the way didn't you once ask how do you use options positioning as an indicator? well it's all there.

  • Great! 1

Share this post


Link to post

I'm obviously just too stupid to understand what volatility is.

Reuters has this to say about GDP/USD:

Soft Brexit tones make pair susceptible to flash moves higher owing to thin summer liquidity. (PS/PAS)

But nobody bothers to look at volume.

A nice wee flash is a brilliant way to shake off all the bottom feeding retail clients with their pathetically tight stops.

:D

Share this post


Link to post

Join the conversation

You are posting as a guest. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
You are posting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  

  • Member Statistics

    • Total Topics
      7,257
    • Total Posts
      35,994
    • Total Members
      46,008
    Newest Member
    b3t0rd4nu
    Joined 20/08/19 15:21
  • Posts

    • I'm obviously just too stupid to understand what volatility is. Reuters has this to say about GDP/USD: Soft Brexit tones make pair susceptible to flash moves higher owing to thin summer liquidity. (PS/PAS) But nobody bothers to look at volume. A nice wee flash is a brilliant way to shake off all the bottom feeding retail clients with their pathetically tight stops.
    • just need to know which order type to use so that my stock wont expire as i plan to hold it for a long time,  any feedback would be appreciated, thankyou 
    • I'm sorry but I cannot rise to that bait. No comment
×
×