A horrible and deadly danger
Welcome to Issue 064 of Masters in Trading Digest.
Let’s talk about how to handle stock market volatility.
The VIX index is used to measure volatility in the market. It’s like a scorecard that tells you how crazy the market is behaving.
Today, it trades at 30. That’s “crazy-level.”
When the VIX trades at 30, traders should consider trading half their normal position size to account for higher expectations of stock market movement.
I heard a great story this week that I am excited to share with you.
New trades are released Monday, look out for a Platinum squeeze.
Enjoy,
Jonathan
ARE YOU OK?
“Without education, we are in a horrible and deadly danger of taking educated people seriously.” ― G.K. Chesterton
“How’s everyone doing?” I asked in our Options Discord Wednesday morning.
“Doing well. All my live trades have worked out so far,” Faisal replied.
“Played the past two VIX trades more conservatively this time, trading smaller and less stressful sizes using MES. Made about a 3rd of the expected range each time, about $1500. I’m comfortable with this as the account grows.”
This Video Explains the VIX Trades
Faisal then adds, “I took a ZB and ZF Implied Volatility Trades live for the first time, I wanted to test the waters with just one lot.”
The volatility trade referred to includes trading short-term bond futures (intraday) around weekly Implied Volatility Bands.
The chart above shows the “Implied Volatility trade” Faisal refers to.
Those trades worked out well, about $2k or so from both. Slowly grinding, started with $21k. It’s at $29k right now.
“Thanks for all the guidance.” – Faisal.
Masters in Trading Digest - Issue 64
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FINAL THOUGHTS
WHAT TO EXPECT IN THE NEXT MIT DIGEST
Platinum is looking quite attractive right now. Physical inventory levels are dropping fast today.
Over a decade ago, the automotive industry would use platinum before using palladium as they do now. With prices continuing to distort, what happens to prices if the market corrects this inefficiency?
Those are trades to search this weekend.
Go ahead and watch this presentation on the VIX. If I can have you learn one thing, I’d ask you to follow VIX Term Structure to protect against these type of violent market moves.
Keep your feedback coming into support@mastersintrading.com. We’re excited to share your feedback along with fantastic suggestions for upcoming issues.
Until then, trade smart and always manage your tail-risk.
Thanks for reading,
Jonathan Rose
P.S. There’s Not a Trading Signal We Have More Confidence In. There’s a PDF Included in the VIX Demo so You Can Follow Along with the Back Tested Trade Results.
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