market volatility

eleanorK80 · May 28, 2023

Have you observed any patterns or correlations between market volatility and the performance of specific trading strategies?

smallfil · May 28, 2023

eleanorK80 said:
Have you observed any patterns or correlations between market volatility and the performance of specific trading strategies?

Most traders love high volatility environments because a lot of traders trade for short term gains. Day traders and scalpers want stock prices to move. So, if XYZ stock is trading, bid 10.25 and ask 10.50, most of the day, the chances of making a decent profit is not so good. Contrast that to ABC stock which is trading at bid 11.00, ask 14.00 and there are more trading opportunities. That said, you are better off focusing on the trading strategies that you have backtested and has an edge and keep using those strategies. Volatility in stocks, comes and goes, at any given time, any stock could be in a low volatility environment or in a high volatility environment and it changes like the incoming waves from the sea. At times, you have smaller waves and if there is a storm coming, waves are that much larger in size and power. Volatility comes and goes and we have to just embrace it. We do not have any control over when the stockmarket will have a high or low volatility. It just happens.

earth_imperator · May 28, 2023

notagain · May 28, 2023

Trend strategy needs the rock and roll.

lindq · May 28, 2023

eleanorK80 said:
Have you observed any patterns or correlations between market volatility and the performance of specific trading strategies?

Of course. Many strategies live or die with the VIX. And I have found it critical to include it in developing anything related to the US market.

eleanorK80 · May 30, 2023

smallfil said:
Most traders love high volatility environments because a lot of traders trade for short term gains. Day traders and scalpers want stock prices to move. So, if XYZ stock is trading, bid 10.25 and ask 10.50, most of the day, the chances of making a decent profit is not so good. Contrast that to ABC stock which is trading at bid 11.00, ask 14.00 and there are more trading opportunities. That said, you are better off focusing on the trading strategies that you have backtested and has an edge and keep using those strategies. Volatility in stocks, comes and goes, at any given time, any stock could be in a low volatility environment or in a high volatility environment and it changes like the incoming waves from the sea. At times, you have smaller waves and if there is a storm coming, waves are that much larger in size and power. Volatility comes and goes and we have to just embrace it. We do not have any control over when the stockmarket will have a high or low volatility. It just happens.

why short term gains??? I don't go for scalping also my broker does not guarantee the profit of scalping. do you use demos for back testing?

eleanorK80 · May 30, 2023

earth_imperator said:
Yes

Haha, short and sweet! Love the response!

eleanorK80 · May 30, 2023

lindq said:
Of course. Many strategies live or die with the VIX. And I have found it critical to include it in developing anything related to the US market.

Absolutely! The VIX is like a secret weapon for many trading strategies in the US market.

eleanorK80 · May 30, 2023

notagain said:
Trend strategy needs the rock and roll.

You got it! The trend strategy is all about rocking and rolling with the market's flow

murray t turtle · Jun 22, 2023

eleanorK80 said:
Have you observed any patterns or correlations between market volatility and the performance of specific trading strategies?

%%
YES;
a concrete example.
When something oil related goes up split adjusted LOL from $2,000 to 10,000[about 500% in 12 months] doesnt exspect DRIP to do that every year. So get some other good trends also.
Direxion daily reduced the leVerage from 3x to 2 x; so i used 2x data LOL

And that kind of monster moVe makes normal good Don channels+RSI seem silly, but thats life+ i dont use RSI anyway.