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Volatility Index Trade Trading FAQs
What is the best strategy to trade VIX?
What is the best strategy to trade VIX?
Volatility Trading VIX
One of the most common tactics for trading the VIX index is to employ some simple technical indicators to trade its volatility. Bollinger Bands and moving averages are used to define entry and exit locations for our trades in this approach. The VIX is a volatility index calculated using the values of option premiums in the S&P 500 index (which is an index comprising 500 large-cap stocks). It is an excellent indication of market volatility expectations; notice that I said "expectations," not actual volatility or what will occur. This is critical; it is only a generalisation based on the premiums investors are ready to pay for the privilege to acquire or sell shares.