Question about VIX

[rallymode]

Quote from MandelbrotSet:

Actually there is value in what he seeks. But as nitro says, it will not come easy, and most definitely no one (at least no one here) will give it to him.

Good trading.

Then i suppose you wouldnt mind posting a simple example of how you would use an ATR value to gain edge. No need to post your secret formula, just give me 1 simple trade example.

 

[Lawrence Chan]

Old VIX from 5 years ago and earlier was computed in a different way from the one you have now.

The new one is supposed to be less noisy - until last year.

Maybe they will change the formula again!

 

[DennisR]

Quote from DennisR:

I concentrate on the vix more than anything. there is definitely no direct correlation between the vix and any one stock. Heck it went against the entire index the last few days.
you may be more interested in your stocks option pricing vs. the vix. Or as mentioned overlay vix with stock you are interested in although i don't really see a usable mathematical correlation. Or at best use it in addition to more reliable technicals.

if anything your original formula should use a multiplier lower than 1 when the vix rises since it usually does so when the market sells. (unless you're tracking an inverse fund or something)

trash last post. didn't realize you were looking for atr. sry

 

[Lawrence Chan]

Quote from rallymode:

Then i suppose you wouldnt mind posting a simple example of how you would use an ATR value to gain edge. No need to post your secret formula, just give me 1 simple trade example.

I mentioned something along this line in the ES Journal.

No exact formula because you have to adapt it to your own usage and risk tolerence.

In short, for some particular trading setups, you need to use intraday ATR to mesasure the risk/reward ratio. That becomes a yard stick for many useful purpose.