Justinian

I was considering going in but there were too many non confirmations in my signals for me. It seems the rally was driven by the usual suspects - that narrow handful of mega cap stocks that responded to the lower gas price, lower inflation, lower interest rates meme. But with disrupted supply where it is and the under investment in oil the last few years, I don't think that particular story is over just yet for this cycle. And as stated in the article, the bounce had that feeling of sharp short covering on hopeful news flow that was characteristic of the Great Financial Crisis. My main worry is the valuation of tech and the effect a small tightening in monetary policy may have on the entire edifice.

Thankyou for that. It pretty much replicates the answer posted by JamesIG earlier in this thread. What it doesn't answer is why doesn't it seem to decay like VXX as the month progresses and the futures curve is in contango. They both purport to operate in the same way by buying and selling 2 front month futures contracts on a daily basis during the course of a month. I attach charts of Vxx and IG's Volatility Index and you can see how vxx decays over time yet Volatility index does not seem to. What I would like to understand is what is the difference between them.

I have only just noticed the dfb version of the Volatility Index. The description you have of the dfb is that it seems to operate like the etf VXX? VXX is notorious for decay because as the month progresses one has to typically sell at a higher future and replace with a closer, lower one each day. The chart of the ig index dfb does not seem to indicate strong decay. Is that just a trick of the chart or do you have some special calculation that stops it? e.g. such as not gifting the proceeds of decay to those who may want to short the Volatility dfb? Is there any documentation I can peruse so that I can understand exactly how it works?

Just an idea, but maybe worth having an account elsewhere too? That way if you are having a platform problem on one and you can't do anything with your positions, at least you can use the other platform to nullify that trade. e.g. say you were short us500 this morning on igindex but as it moved so strongly against you, you wanted to close that position but were unable to do so, then you could place an equivalent short trade on the other platform.

Hi Casey, I'm not referring to the ESMA-related margin increases. This is actually funding costs I'm talking about. Changes to overnight funding rates From 4 February, we’re changing the way we calculate overnight funding on shares and indices. Whereas the interest rate used to be based on the currency of the trade, it will now be based on the currency of the underlying instrument. This could affect you positively or negatively – see below for reference. Example: Wall Street If you trade on Wall Street in GBP, you’d previously pay overnight funding based on the GBP interest rate. From 4 February, you’ll pay funding based on the USD rate instead. So if you bought £2 per point at 24,000, giving you a notional value of £48,000, this is how your funding charges would change: Interbank rate1 IG rate2 Daily cost GBP 0.73% 3.23% £4.31 USD 2.52% 5.02% £6.69 Difference: £-2.38 If you sold £2 per point at 24,000, giving you a notional value of £48,000, this is how your funding charges would change: Interbank rate1 IG rate2 Daily cost GBP 0.73% 1.77% £2.36 USD 2.52% -0.02% -£0.03 Difference: £2.39 1 ‘Rate’ refers to the 1-month interbank funding rate (eg LIBOR for the UK). Rates correct as of 14 January 2019. 2 ‘IG rate’ refers our total funding charge, which is 2.5% on top of the interbank rate. We debit your account for a long position, and credit your account for a short position (if the interbank funding rate is greater than 2.5%, or greater than 3% on mini/micro CFD contracts). Find out more here.

"You need to block it all out and concentrate on reactions rather than predictions and having a plan for whatever the market does. " Great line Caseynotes. One reason why I think Macro trading is flawed - based on making predictions and when price goes against you, you can remain wedded to your position and load up with even more 'bargains'. God punishes those who pretend to knowledge and think they know the future. Anyway, what do you think about the changes in IG's funding costs? Will it alter how you trade? I should start a different thread I guess.