How to predict if a market will be volatile? | Traders Hideout - futures trading strategies, market news, trading charts and platforms

Traders Hideout

Discuss day trading practices and futures trading strategies on this forum for all markets. This forum is also for discussing and reviews for brokers, data feeds, and commercial or third party add-ons


How to predict if a market will be volatile?

  #13 (permalink)

Posts: 20 since Feb 2017
Thanks: 27 given, 19 received

You specifically ask for which day you'll see higher volatility, and I think at the 1-Day resolution the best indicator will be a good economic calendar:

-There will be higher probability of large one-day moves upon the announcement of key reports.

-From a lower resolution view like week to week, month to month, you'll notice some markets, like grains, have seasonal tendencies for higher volatility (Corn volatility usually spikes in July). Furthermore you can also make mean reversion observations, that is, "it's lower than normal right now, higher is likely to follow, just a matter of when"

-For a 1-hour resolution, I've seen the biggest moves within the first 30 minutes of normal market hours. I know this because I have volatility alerts set for /CL, /ES, /ZC, and /ZS and this is when they usually trigger. Even though futures are traded 23/6, I think the reason they often move at normal market open is because 1.) This is when a lot of professional traders and institutions start their work day in the US and 2.) People playing arbitrage opportunities against the markets that do open at 9:30 EST.

I'm assuming we're talking about historical volatility and not implied volatility.

Reply With Quote
The following user says Thank You to Captain135 for this post: