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Getting Started

For any questions about your membership please email jay@tradingvolatility.net.


Overview

We focus on volatility ETPs here. The nice thing is that we can trade volatility in both directions so it doesn't matter too much what the market is doing. While the S&P 500 is typically inversely correlated to VIX it's not always the case, which is another reason I mostly just focus on VIX & VIX futures since they are what drive the volatility ETPs.

First thing you want to do is read our strategy page so you understand the differences between the various indicators. The easiest strategy to follow is the VRP+VXX Bias strategy.

What Strategy to Use?

Which signal you follow is up to you. You can read about the performance of each on the strategy page. VRP has a higher average return but is more inconsistent. All volatility strategies have certain weaknesses which can leave your portfolio vulnerable. I prefer to use VXX Bias, VRP, and VIX GEX simultaneously as complimentary strategies to help diversify performance. This smooths out returns and helps reduce anxiety over movement on a given day, allowing me to instead just focus on following the rules and really use the strategies.

For accounts that are small (say <$10,000) it is probably more cost effective to just follow one strategy or the "Combined Strategy" (see below). The VXX Bias, VRP, and VIX GEX strategies are excellent over the long term, but over the course of several months one just won't perform as well. Performance of all strategies is dependent on the market conditions, and since no one really knows what we will face next, I like to use three signals that compliment each other.

Using the VXX Bias, VRP, and VIX GEX together

(This is also referred to as the "Trading Volatility 1", "TV1", or "Combined Strategy")
Enter full positions only when VRP, VXX Bias, and VIX agree on what security should be bought.
- Buy SVXY when the VXX Bias, VRP, and VIX GEX are all negative.
- Sell SVXY if VXX Bias, VRP, and VIX GEX are not all negative.

- Buy VXX when the VXX Bias, VRP, and VIX GEX are all positive.
- Sell VXX if VXX Bias, VRP, and VIX GEX are not all positive.

Trading Times

While the official indicator values don't come out until 4:33pm ET, you can always see the estimated closing value for each of the indicators and place your trades before the close. Pick a time convenient for you to trade -- Just before the closing bell or in after hours trading works best.

The Intraday Indicators are meant to provide you with advanced warning that a signal change may happen, but a buy/sell signal is not officially generated until the end of the day.

Sign Up For Alerts

Go to the Alerts page and enter the email address (can also be a text message email) where you want your alerts sent. I recommend only choosing to receive alerts for the strategy that you are following. It can be confusing to get buy/sell alerts for different strategies.

Strategy Allocation

Allocate an amount of money to the strategy and roll the proceeds from any sale to the next trade. For example, if you allocate 30k and make 5% on the trade the next time you buy 31.5k worth. If the trade was -5% then it would be 28.5k next time.

There's no way to curry know which trades are going to be winners. That's why process and size consistency matter.

Other Things To Remember

All strategies have more losing trades than winning trades. However, it works over the longer term because the winning trades are much larger than the losing trades. The avg annual returns on the strategies is high (52% per year for VRP+VXX Bias with a cumulative of over 500% as tracked by C2 (as of 4/30/2020)). Try not to get emotional or discouraged after losing trades.