The theory of average

4 thg 12, 2021

Often while trading markets we use various indicators like SMA, EMA, MACD that are based on the thoery that market trends to follow averages everything else remaining constant. Using the same concept and applying it to vix that it would trade in its normal range we have plotted two horizontal lines on vix. This lines gave us the idea when the market moved beyond averages due to extraordinary situations. It can be seen applying the same average points to Index chart that it has acted as a turning point for the given trend . An interesting observation in the given study is that the vix after a sudden market drop has started declining giving us an indication that bears are losing steam. Same can be used to any index you wish to trade to gain meaningful insights.