So, it seems like the US is getting a new president. Say what you want about Trump, but there's no denying that the markets under Trump have been a great market for short term traders. Under Obamas administration there were still periods of volatility, but on average it was far more dull than what we've seen under Trump. Of course, the pandemic this year would probably have caused great volatility even without Trump. For example, during most of 2010, the 20-day average RTH range in the e-mini S&P 500 was below 15.00 points most of the year. And there were overall larger periods of time where the average 20-day RTH range was 10 points or lower. Any thoughts for what the future holds under a Biden administration? Will we see reduced volatility as policies should become more stable and predictable? Or is the US in such a mess right now that we will see volatility regardless? Note: Nominal values on the S&P have tripled since 2009, so simply looking at RTH Range values is not entirely correct. Since the nominal values on the indices are at such a high level now, we should hopefully still have a very tradeable market even if volatility eventually drops.
Definitely going to miss the tweets! What will be interesting is if new administration will be less intrusive, at least publicly, in Fed policy. I need to see a sign that the Fed put is still in effect and not too far OTM
Sorry maybe I am sounding stupid but... the price of the SnP has risen with 63% since 2016 (from what I am eyeballing). So aren't those larger moves (to some degree) proportional to the higher price ?
The higher nominal value is what I think will at least offer more range. When the SnP is 2500, a 0.5% move is 12.5 points. At 3500, it's 17.5 points. I haven't crunched data yet, but according to your historical data, what's the median and average daily RTH percentage move for 2010?
That is a tough call. Top of mind, here are a partial list of variables: 1. Possible transaction tax on retail trades reducing retail participation in short term equity trading, but may increase retail participation in options. 2. Continued easy Federal Reserve policy, potentially increased Federal Budget and trade deficits create increased monetary concerns that in turn results in an impetus for increased money flows in netween certain asset classes and countries. 3. Income tax increases on the wealthy and corporations result in monetary flows outside the US and may affect equity valuation models, possibly disportionately affecting one sector versus another, such as technology versus industrials. 4. Government contracts may have an even greater impact on the long term outlook on certain single names or even select sectors. 5. There will be the usual crises plus possible increased assertiveness by major powers and how the new administration deal with these will determine their effect on geopolitical risk. 6. Investment themes based on demographic changes due to Coronavirus may become popular. 7. Alternative energy and environmental plays will likely retain investor attention. 8. While it seems likely civil unrest in the US will decline, if it doesn’t, increased population outflows from large cities to rural areas will persist or even gain momentum. Based on the above, it is harder for me to predict relative volatility levels than money flows. Perhaps gamma events in popular technology companies or the broader market will drive short term spikes, maybe leading to an increase in the volatility of volatility? Much to think about looking forward, although knowing 2020, it is probably not done with us yet.
Event risk will certainly be reduced. Big business and Wall Street spent a great deal of money helping Democrats defeat Trump; they'll expect a return on that investment. That means back to business as usual on trade and outsourcing, likely in exchange for "climate action pledges" and possibly token actions on fisheries and the Uighurs. Definitely no FTT for now. Jim Simons paid $7 million to put it off at least four years, so make 'em count. In general I expect lower vol than 2019 but not as low as 2017 and before. We should see the final 30-40% markup in US large cap indices (basically closing the yield gap) and money increasingly looking for better deals outside the US - eg Japan stocks are at a 29 year high. Should be lots of nice action in highly speculative alt-assets, like BTC and other vehicles not yet devised. Overall a good time to realize there are lots of other markets out there besides ES/NQ.
I like the thought but what else out there is as accessible as micro e-mini to a retail trader with a starting 10k account size?
You're not stupid and just from a quick visual it can seem like adjusting for nominal values the difference is not as pronounced. I'm a bit busy right now, but will try to normalize this data by dividing RTH Range / S&P Closing price. For the record: The data above is from 09:30 - 04:00 PM ET. I don't think there's any doubt that the markets have been more volatile under Trump, though.
Surely that time will be if volatility shrinks? Right now, I don't imagine there are many markets that are better for short term trading than US indices. There's both plenty of movement and liquidity.
Agreed. Volatility is almost certainly going down as we head into summer 2021. As @Specterx said, it'll be higher than before such that I think there'll be enough movement to make money, but either scalps are going to be smaller or holding times are going to be longer and larger size required.