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Using VIX to generate (or confirm) ES day trading signals?


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Using VIX to generate (or confirm) ES day trading signals?

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  #1 (permalink)
 Tuglife 
Escondido CA USA
 
Experience: Beginner
Platform: Jigsaw Daytradr + Ninjatr
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I just watched an interesting video. The trader drew a trendline 0n an intraday VIX chart and implied that he took an ES trade based on how the VIX was moving.

Do many traders use the VIX to generate (or confirm) day trading signals on the ES? Can someone recommend a book I can read that examines this? I have looked but all the books I have seen regarding the VIX deal with VIX options. Those are interesting in themselves but that's another story.

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 WoodyFox 
Columbus, Ohio
 
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Tuglife View Post
I just watched an interesting video. The trader drew a trendline 0n an intraday VIX chart and implied that he took an ES trade based on how the VIX was moving.

Do many traders use the VIX to generate (or confirm) day trading signals on the ES? Can someone recommend a book I can read that examines this? I have looked but all the books I have seen regarding the VIX deal with VIX options. Those are interesting in themselves but that's another story.

First off...VIX is forward looking at the expected/implied 1 year move up or down (when annualized). You can use the square root of time method to narrow this down to smaller time frames. For the trader to use a trendline on a simple VIX chart and base trades off that for ES, he would be looking for longer duration moves...not day trading in the sense. And even then, that would be very basic in use. Now if he is breaking the VIX down, he could compare the VIX reaction to the actual move in the ES and extrapolate a period of overpriced or underpriced fear. Just a trendline I would be highly weary of in the short term.

As far as books, let me know if you find a good one that actually shows how to trade with profit using this most prized info. I do not think you are going to find one and it would be a hot seller. Most of what I have learned is self taught and from bits and pieces from tons of literature.

Here is a thread that talks in general about the VIX. Seen it pop up at times, but never really read much of it, but it might help in some way.


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  #3 (permalink)
 WoodyFox 
Columbus, Ohio
 
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Sorry, just re-read your post. You said intraday VIX. Either way I would be weary of this...but I never say never?

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