Using the vix as a fear gauge in binary options trading
The higher the number, the more the market is expected to move. When the VIX is low, markets tend to slowly grind upward or downward. Within the past few weeks,it has not been uncommon to see the Dow Jones rise or fall hundreds of points. The daily chart below shows the recent spike in the VIX:.
There are many directional strategies that have performed consistently until recently. This came from an observation made by veteran trading educator Tom Busby, founder of Diversified Training Institute. He observed that the 7am EDT hourly candlestick on the DAX is a pivotal point that determines the direction of market for the following hour.
The rules for this strategy can be found on a previous article on this blog. This strategy seems to behave the most reliably when the VIX is traveling between Light to moderate volatility — nothing crazy. When volatility is high in the US Indices, at can affect other indices around the world. Aliquam lobortis magna accumsan erat fermentum, at dapibus neque maximus. Fusce lacinia rutrum justo ut hendrerit.
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