Will Vol crash?
- Thread starter qlai
- Start date
The concept of feedback loop is very useful. The idea that the tail is wagging the dog is interesting theory. How can it be useful in day trading?
haven't studied tvix rebalancing protocol itself, but have seen firsthand how large baskets can move markets (uso, gsci, etc). empirically ive seen alot of retail pushing long VIXY frenetically even at these levels. just based off that alone, vol does seem v toppy. even if market continues to grind lower.
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Can you also comment on damped vs undamped oscillation or impulse and decay?
duzo says the market will rally.
Soros has based his trading on loops.
He calls it “Reflexivity”.
Feedbacks loops are either,
Positive : Momentum
Negative : Mean Reversion
So we know it without naming it.
That’s also the boom and bust cycles.
Now ... you can model the financial markets.
There are stocks (Not like AAPL), flows and feedbacks.
You can model the dynamics this way.
But you need a model.
With key variables, parameters, rules and rates of change.
Cybernetics or Information Management Systems are based on it.
Guessing/predicting is not the same as identifying structural changes in the markets. Maybe this is all obvious for the options pros, but I found it insightful. Yes, we are all expecting a rally, but will it be of the same magnitude/velocity as the decline? It has practical implications for making trading decisions, imo.
The sun will rise tomorrow. The sun will set tomorrow. It is the same every day. EVERY DAY. High Vol just makes you think the world is ending. It is not...unless we get hit by an asteroid or we have all out nuclear war. Even then the cock a roaches survive. The End.