How To Profit From Stock Market Volatility

A winning strategy every trader should know

Business Stock Trading Udemy
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How To Profit From Stock Market Volatility

Free Courses : How To Profit From Stock Market Volatility


The key to making money from volatility trading consistently is to simply take advantage of volatility when it's high. If we wait long enough and manage our risk properly, we should be able to make money on every single trade we make. If we bet on a stock, we never know what it's long term direction will be with any certainty. If we get the direction wrong, we'll lose money. Volatility trading is different. We always know the long term direction is down. It's impossible to get it wrong!


ETF Decay

If we try to play rising volatility, we'll be wrong some of the time. Worse yet, we'll be losing money to time decay if we use options. If we buy a volatility ETF, we'll lose money over time to ETF decay. Graph any volatility ETF over time and you'll see that they're all plagued by hideous decay, 30% per year or more. If we bet against volatility, on the other hand, we'll have this long term decay pattern working with us instead of against us. That gives us a trade setup with 2
extremely powerful factors working in our favor: dropping volatility AND ETF decay.

Trading Strategies

Finally, before you place your volatility trade, it's important to know if you're facing a recession, or just a short term pullback in a bull market. A short term pullback is usually over in a few weeks. If a recession unfolds, you'll want to wait for higher VIX levels before placing your trade and expect to be in the trade much longer. How much longer depends on the situation. Fortunately, you won't need a full market recovery for volatility to drop. Once the market settles down, your trade will become profitable. Throughout the course,I'll show you some of things to watch out for, and some of the techniques I use for analyzing volatility trades. We'll go over the difference between short term pull backs and recessions and I'll walk you through the volatility events from 2016. Finally, I'll show you how to set up your first trade and give you some methods for managing your risk.

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