Series of long positions based on the volatility index VIX

20 April 2022 324
Load the latest quotes
Full screen

One of the researches of the MarketCheese team named “Does the index of implied volatility VIX affect the financial markets?” has identified the benefit of the VIX index to forecast the movement of the S&P 500 index. Moreover, VIX may be regarded as the 1-hour leading indicator. 


On the daily chart of the S&P 500, we see that the price tries to overcome the most reachable retracement level of Fibo 38.2% to reach the Fibo point of 23.6%:


Also, three signals for the change of price movement to an upward trend are justifying themselves so far, and this means, we can rely on the potential growth of the S&P 500


This year in the middle of March the financial company Goldman Sachs has renewed the forecast for the American Broad Market Index. Considering the remaining conflict in East Europe, economic risks, and growing sanctions pressure, the company awaits to see the number 4700 at the end of your or 3600 in the negative scenario. Currently, the index is traded near the point of 4440, and this indicates the remaining growth potential.    


We are waiting for May, a month that starts a small decrease in the American stock market — “Sell in May and Go away” effect that has shown the benefit for the forecasting of the S&P 500. This means the index will be possibly growing till the end of April. 



Strategies based on the leading index VIX:


* Look in the open sources for the quotation H1 of the index of implied volatility VIX

* Trade on the one-hour timeframe until S&P 500 reaches the point of 4515.

* Consider only the long positions

* Upon the closing of every hour, watch if VIX grows or stays the same. 


If VIX decreases, buy S&P 500 at the moment the next trading hour begins.

Close the deal at the beginning of the hour as soon as you see the growth or the absence of changes in the volatility index for the previous hour. 


You can limit the losses by the protection order Stop Loss by placing it below the minimum of the previous hour.  



Trading on financial markets implies high levels of risk and can lead to a loss of investment capital. The MarketCheese team isn’t responsible for the possible loss of Your investment funds.

This content is for informational purposes only and is not intended to be investing advice.

New Popular
Commenting rules

Subscribe to our newsletter and stay up to date with all the news!