http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index Three Reasons to Pay Attention to the VIX Index A useful trading tool is the VIX index. This is predictor of future market volatility. There are three reasons to pay attention to the VIX index but first of all just what is the VIX index just what are its components? VIX Index According to the Chicago Board Options Exchange, CBOE, the CBOE Volatility Index is a key measure of market expectations of near-term volatility conveyed by s&p 500 stock index option prices. since its introduction in 1993, vix has been considered by many to be the world’s premier barometer of investor sentiment and market volatility. for investors who wish to trade an instrument related to the market’s expectation of future volatility, vix futures were introduced in 2004, and vix options were introduced in 2006. In other words you can use the VIX as in indicator of future market activity or you can trade the VIX itself. The VIX is quoted in percentage points. It translates more or less to the expected movement in the S&P 500 index over the coming month. The number is annualized. VIX is a registered trademark of the CBOE. How to Use the VIX The VIX index gives traders a heads up for coming market activity. As a weighted mix of prices for a range of options on the S&P 500 index the VIX is an indication of what options traders think about the US economy. Thus the first of our three reasons to pay attention to the VIX index is that it is a harbinger of things to come in the broad US stock market. Traders use this information just like they use any other fundamental and technical data to help predict future stock prices. Because the VIX index and S&P 500 move in opposite directions our second of three reasons to pay attention to the VIX index is that it can be good indicator or where a S&P 500 ETF is going next. Though VIX is frequently used as a measure of investor fear (or complacency), that is really not what it measures, as consensus optimism or pessimism would not result in an especially high VIX. Accordingly, it should probably be better thought of as the “uncertainty index” (though it is fair to admit that the there is a strong link between fear and uncertainty on the Street). Nevertheless, there is a negative correlation between the VIX and S&P 500 Index (meaning that they move in opposite directions). An article in Investopedia talks about using the VIX for profit and hedging. though vix is frequently used as a measure of investor fear (or complacency), that is really not what it measures, as consensus optimism or pessimism would not result in an especially high vix. accordingly, it should probably be better thought of as the “uncertainty index” (though it is fair to admit that the there is a strong link between fear and uncertainty on the street).

1. Three Reasons to Pay
Attention to the VIX
Index
By: www.ProfitableTradingTips.com

2. A useful trading tool is the
VIX index. This is predictor of
future market volatility.
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

3. There are three reasons to
pay attention to the VIX index
but first of all just what is the
VIX index just what are its
components?
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

4. Before We Continue…
Click the links below to get your
FREE training materials.
Free Weekly Investing Webinars
Don’t miss these free training events!
http://www.profitableinvestingtips.com/free-webinar
Forex Conspiracy Report
Read every word of this report!
http://www.forexconspiracyreport.com
Get 12 Free Japanese Candlestick Videos
Includes training for all 12 major candlestick signals.
http://www.candlestickforums.com
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

5. VIX Index
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

6. According to the Chicago
Board Options Exchange,
CBOE, the CBOE Volatility
Index
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

7. is a key measure of market
expectations of near-term
volatility conveyed by s&p
500 stock index option prices.
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

8. since its introduction in 1993,
vix has been considered by
many to be the world’s
premier barometer of investor
sentiment and market
volatility.
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

9. for investors who wish to
trade an instrument related
to the market’s expectation of
future volatility, vix futures
were introduced in 2004, and
vix options were introduced in
2006.
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

10. In other words you can use
the VIX as in indicator of
future market activity or you
can trade the VIX itself.
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

11. The VIX is quoted in
percentage points. It
translates more or less to the
expected movement in the
S&P 500 index over the
coming month.
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

12. The number is annualized.
VIX is a registered trademark
of the CBOE.
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

13. How to Use the VIX
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

14. The VIX index gives traders a
heads up for coming market
activity.
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

15. As a weighted mix of prices
for a range of options on the
S&P 500 index the VIX is an
indication of what options
traders think about the US
economy.
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

16. Thus the first of our three
reasons to pay attention to
the VIX index is that it is a
harbinger of things to come in
the broad US stock market.
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

17. Traders use this information
just like they use any other
fundamental and technical
data to help predict future
stock prices.
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

18. Because the VIX index and
S&P 500 move in opposite
directions our second of three
reasons to pay attention to
the VIX index is that it can be
good indicator or where a
S&P 500 ETF is going next.
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

19. Though VIX is frequently used
as a measure of investor fear
(or complacency)
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

20. that is really not what it
measures, as consensus
optimism or pessimism would
not result in an especially
high VIX.
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

21. Accordingly, it should
probably be better thought of
as the “uncertainty index”
(though it is fair to admit that
the there is a strong link
between fear and uncertainty
on the Street).
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

22. Nevertheless, there is a
negative correlation between
the VIX and S&P 500 Index
(meaning that they move in
opposite directions).
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

23. An article in Investopedia
talks about using the VIX
for profit and hedging.
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

24. though vix is frequently used
as a measure of investor fear
(or complacency), that is
really not what it measures,
as consensus optimism or
pessimism would not result in
an especially high vix.
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

25. accordingly, it should
probably be better thought of
as the “uncertainty index”
(though it is fair to admit that
the there is a strong link
between fear and uncertainty
on the street).
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

26. nevertheless, there is a
negative correlation between
the vix and s&p 500 index
(meaning that they move in
opposite directions).
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

27. Although the relationship of
VIX to S&P 500 is not a one
to one correlation the VIX is
still a good predictor of the
short term direction of the
S&P 500 and therefore the US
economy.
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

28. Using the VIX for Trend
Trading
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

29. The trend trading
definition in Investopedia is
as follows:
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

30. a trading strategy that
attempts to capture gains
through the analysis of an
asset’s momentum in a
particular direction.
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

31. the trend trader enters into a
long position when a stock is
trending upward
(successively higher highs).
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index

32. conversely, a short position is
taken when the stock is in a
down trend (successively
lower highs).
http://profitabletradingtips.com/profitable-trading-tips/three-reasons-to-pay-attention-to-the-vix-index