Top.Mail.Ru
empty
28.02.2020 12:42 AM
How to make money on fear - what does the #SPX stock market crash teach us?

Monday, Tuesday and Wednesday can rightfully be called rainy days for global financial markets. In particular, traders and investors who had never encountered anything like it before, as a result, many of them received the so-called margin warning - margin call.

The positions of traders are large, the pledges are small, and the market itself is more likely to range than trend. The victims in such cases are those who do not comply with the risks and open positions in large volumes, but even those who observe the rules of money management and diversify their risks often find themselves in an unpleasant situation, which is caused by increased volatility. Today we'll talk about the application of volatility to analyze financial markets.

This image is no longer relevant

Volatility is the rate at which a price changes over a given period of time. A sharp increase in price fluctuations usually accompanies a fall in stock markets, from which important conclusions can be drawn. By analyzing the behavior of volatility, predicting the direction of its movement, it is possible to determine favorable and unfavorable periods for investments and opening positions in assets such as CFDs on stock indices - #SPX, gold - Gold and other precious metals, Japanese yen - USDJPY, US dollar and oil - #CL.

It is easier said than done, however, from the intermarket technical analysis, we know that when stock markets go down, there are changes in the price of safe havens and a decrease in the oil market. The relationship between the stock market and other assets looks like this: a decline in the stock market is accompanied by increased volatility, an increase in the dollar and gold prices, a decrease in the price of oil and the USDJPY pair.

Quotes of all the above assets are available at InstaFOREX terminals, but where can I get data for volatility analysis? The answer to this question only at first glance seems complicated, the so-called "Fear Index" - VIX, which reflects the volatility of stock prices of the hundred leading US corporations included in the S&P 500 stock index, will help us in analyzing the structure of volatility. Multiple resources on the network offer convenient tools for analyzing this index, and in order not to blur the mind over the monitor, we will analyze the current situation in VIX (Fig. 1).

I want to explain to the readers the following points. The daily time reflects the situation from one month to six months. Period 5 on the daily time is a week, period 20 is a month, period 120 is six months. The standard settings for the RSI indicator in the stock market is period 14, the MACD indicator is set to 12.26.9 by default. Periods 20 and 120, which are closely related to business cycles, are especially important for analysis.

This image is no longer relevant

Fig. 1: VIX index, day, period one year.

So what does the current situation in the VIX index tell us? First of all, we see that the index indicators are 26.26 and exceeded the volatility indicators for the entire previous year. Therefore, we can say that as scary as it is now, the markets have not had since the active phase of the trade war between China and the United States in December 2018.

An interesting feature is that the stock market grows when the VIX index is below the 120-moving average, and other indicators are reduced. Now we see that indicators are growing. Consequently, conclusions from this situation will suggest a lack of opportunities to buy shares in US companies and the availability of opportunities for their sale. Similarly, one can evaluate stock indices - as long as the situation with volatility has not returned to normal, any recovery of stock indices should be considered from the point of view of opening trading positions.

However, this is not all, as follows from inter-market analysis, with increasing volatility, we should look for opportunities to buy precious metals, primarily gold, we can also consider buying the US dollar against a basket of foreign currencies, selling the USDJPY pair and selling oil. In other words, we do not consider signals that contradict our assumptions, and, on the contrary, look for signals that confirm our hypothesis, while not forgetting about the prospects for the movement of assets from one to six months. An analysis of volatility in other periods may give us solutions for short-term deals in lesser times.

Volatility analysis is a non-trivial task in itself, over which many traders and investors are puzzled. However, a trader who has the basics of technical analysis can always use this tool, which, however, does not eliminate the need for him to follow the rules of money management. Be cautious and careful.

Pilih carta masa
5
min
15
min
30
min
1
jam
4
jam
1
hari
1
minggu
Jana pendapatan melalui perubahan kadar mata wang kripto dengan InstaForex.
Muat turun MetaTrader 4 dan buka dagangan pertama anda.
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    SERTAI PERADUAN

Artikel yang dicadangkan

Gambaran Keseluruhan GBP/USD – 30 Jun: Senarai Gaji Bukan Ladang, Powell dan Pengangguran

Pasangan mata wang GBP/USD telah meningkat sebanyak 300 pip sepanjang minggu lalu dan nampaknya masih belum tergesa-gesa untuk berhenti. Malah pada hari Jumaat, harga gagal memulakan pembetulan penurunan walaupun hampir

Paolo Greco 03:37 2025-06-30 UTC+2

Gambaran Keseluruhan EUR/USD – 30 Jun: Inflasi Zon Euro dan Pusingan Baharu Ucapan Lagarde

Pasangan mata wang EUR/USD telah meningkat selama lima bulan berturut-turut. Dalam tempoh ini, kita hanya melihat beberapa pembetulan ke bawah yang kecil, setiap satunya berakhir dengan kejatuhan lagi dolar A.S

Paolo Greco 03:37 2025-06-30 UTC+2

Dolar Amerika – Pratonton Mingguan

Latar belakang berita dari Amerika sekali lagi akan memainkan peranan penting untuk dolar dan, oleh itu, untuk pasaran dan sebahagian besar instrumen. Minggu lepas, hanya dua peristiwa yang mencetuskan gelombang

Chin Zhao 00:34 2025-06-30 UTC+2

Pound Sterling British – Pratonton Mingguan

Situasi bagi pound British dalam landskap pasaran dan berita adalah agak serupa. Bagi pound, dua pemotongan kadar oleh Bank of England pada tahun 2025 atau ketiadaan sebarang pusingan pelonggaran daripada

Chin Zhao 00:34 2025-06-30 UTC+2

Mata Wang Euro – Pratonton Mingguan

Pada minggu hadapan, euro dijangka akan mengekalkan permintaan dalam pasaran. Pada masa ini, semua acara sedang berpihak kepadanya. Saya pernah menulis sebelum ini bahawa hanya struktur gelombang mungkin mampu memberikan

Chin Zhao 00:33 2025-06-30 UTC+2

EUR/USD – Pratonton Mingguan: Indeks ISM, Senarai Gaji Bukan Ladang, Inflasi Zon Euro, dan "One Big Beautiful Bill"

Minggu hadapan menjanjikan suasana yang menarik dan penuh maklumat, di samping tahap turun naik yang tinggi. Kalendar ekonomi dipenuhi dengan penerbitan utama yang boleh mencetuskan peningkatan volatiliti dalam pasangan EUR/USD

Irina Manzenko 00:33 2025-06-30 UTC+2

EUR/JPY. Analisis dan Ramalan

Pada sesi dagangan hari ini, pasangan EUR/JPY sedang mendapatkan kembali momentum positifnya, membalikkan penurunan terkini. Euro terus mendapat manfaat daripada sentimen terkini yang menjual dolar AS. Pada masa yang sama

Irina Yanina 12:17 2025-06-27 UTC+2

Inflasi di Kanada Masih Terlalu Tinggi – USD/CAD Berisiko Mempercepat Penurunan

Inflasi di Kanada masih terlalu tinggi untuk mengharapkan pemotongan kadar faedah oleh Bank of Canada pada mesyuarat yang akan datang. Pada bulan April, inflasi turun dengan mendadak kepada 1.7% y/y

Kuvat Raharjo 11:16 2025-06-27 UTC+2

XAU/USD. Analisis dan Ramalan

Emas mendapat kecenderungan jualan semula hari ini selepas menembusi tahap utama $3300. Pedagang sedang menantikan keluaran Indeks Harga Perbelanjaan Penggunaan Peribadi (PCE) AS, yang dianggap sebagai penunjuk penting untuk menilai

Irina Yanina 10:47 2025-06-27 UTC+2

Pasaran Bebas Terkawal

Ketamakan telah kembali dalam pasaran. Walaupun para profesional memberi amaran tentang keperluan berhati-hati di tengah-tengah ketidakpastian geopolitik, perang dagang, dan keadaan ekonomi Amerika Syarikat, pelabur runcit sekali lagi bertindak seolah-olah

Marek Petkovich 09:16 2025-06-27 UTC+2
Tidak boleh bertanya sekarang?
Tanya soalan anda di Ruangan bersembang.
Panggilan semula Widget
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.