Can anyone tell me what the VIX, VXO and VXN are and how they are used in trading? Thanks in advance.
Use the following search info... 1. EliteTraders.com search menu in the upper right corner...type in VIX or VXO or VXN for info about it. 2. Google.com search engine and you'll definitions and some websites that explains the basics of how they use it in trading. VXO is the old VIX and VIX is calculated differently since September of last year. VXN is the Nasday version of the S&P VIX. They are all Market Volatility Index...market sentiment. NihabaAshi
Just one example of the information out there: http://stockcharts.com/education/IndicatorAnalysis/indic_VIX.html The article is a little old and as mentioned, the VIX is now calculated using the S&P 500 options (VXO is the "new" symbol for the "old" VIX [S&P 100]). In addition to the VXN for Nasdaq there is also a volatility index for the QQQs (QQV).
Thanks for the help. I tried the ET search but there was not much definition, but lots of posts with VIX in them. I now have the VIX, VXO and VXN plotted weekly and daily with the SPX and NASDAQ over a 9 year period. I would like to now do some research using these volatility indexes and the ATR over different time frames. '******* '* Allan * '*******
pspr, I think all market breadth indices like VIX, VXO, VXN, TICK, TRIN, AD Line are useful for intraday trading the Eminis. Their useful confirmation tools. NihabaAshi
Niha, Can you recommend a good book that discusses use of the VIX and perhaps the other breadth indicators? Thanks also for the link to the CBOE, that was very informative and to the point.
CharlesXT, I've never read any books specifically about the VIX nor with any chapters specific about the VIX. After you posted your question...I used Google search engine and I keep seeing the books by Laurence A. Connors 1. Trading Connors VIX Reversals 2. Connors On Advanced Trading Strategies I'm not recommending the above books...they are just the only books I could find via Google that seems to be devoted to the subject VIX. Maybe your local library has a copy or can get a copy as an inter-library loan. I've already used ET's reviews on books and didn't find anything there about the above books... http://www.elitetrader.com/bo/index.cfm Here's my suggestion if the VIX or any other market breadth index merits further investigation... Print out intraday charts going back about 3 months. If you don't have historical intraday charts...start printing today for the next 3 months... Do the same via whatever your trading...put those charts side by side with the charts of the VIX and do a comparison... Put your favorite indicators on the VIX and try others... You'll start seeing something that merits further investigation and possible testing via a realtime simulator as you continue learning about the VIX. (Note: Do this type of research via the printed out charts and not via studying the charts on your computer...you'll be less likely to miss something) Takes time but will be worth it because whatever you discover will be via your own trade methodology and not via someone's else. If you don't have that time nor the energy to study the VIX...you may have to purchase those above books (get them from the library if possible) or subscribe to a website that offers info about it... I believe TradingMarkets.com does only because its what also pops up in the search engine about the VIX. Without a doubt...there are reliable trade signals via market breadth indexes. I've only met one trader that had his entire methodology based on signals from the VIX and he no longer trades part-time because he's now a partner at some law firm... he did well as a part-time trader. Good luck with the VIX... its one of those hidden gems that surprises me I don't see a lot of traders using it. No secrets in trading...just the obvious that many traders either ignore or see as unreliable via giving a half-hearted effort in using something. NihabaAshi
Thanks for the very helpful info Niha. I really appreciate you taking the time to help out with this. Before i started this thread, I did find out about Larry Conners and tradingmarkets.com. I found his books to be very expensive. I also searched on ET for opinion about him and found that he is a controversial person. Some like him and others do not like him at all. This is quite different from someone like Tudor Jones who is liked and respected by most people. I put the Connors books on my wishlist at Amazon but will look around Ebay and other places and see if I can not get them for a better price. I do have the Connors Rashcke book. I have recently gotten so many new books that I have not had time to read them all. There may be something in there about VIX? I had never heard of the VIX until about 2 months ago. I have since heard it mentioned here and there and yesterday i spent hours on ET going through posts about the VIX "VIX is high, it's time to buy, VIX is low, time to go" and so on. Once again, your post is very informative and helpful and I really appreciate it. thank you. Allan Your method of the charts on the floor. I had read this before. I think that's a great idea. I have not tried a simulator as yet. I do wonder if you use any statistical testing after you find trading ideas from the charts on the floor method?