Voices Index, also known as the horror index, is a standard that investors use to measure the fear, stress and risk of the market.
How was the volatility index created?
The volatility Index was created in 1993 by the Chicago Board Options Exchange (CBOE) to measure the US stock market volatility. This is a real -time indicator that measures the fluctuations in the SP500 index options. It is always derived from the SP500 index options prices, which are short -term expiry date, and make ups of volatility for the next 30 days. VIX is also known as a scale of vertical volatility as it predicts a change in prices rather than an analysis of historical trends. Estimates are based on the form of batting in which experienced investors bet on the expected future performance of foreign securities in SP500.
Why is the Vix Index important?
VIX helps investors analyze different markets, diversify and protect their departments and speculate on prices. You can connect various devices such as Forex, stock CFD, gold and commodities with VIX. This means that any indicators that will probably fall into the market, when you trade with Vix, will strengthen the appearance of the investor in other markets. However, if a particular market explodes, it can warn investors about other potentially falling markets.
Taking a position in VIX allows you to balance assets in your portfolio while maintaining market exposure. For example, you have a long position in an entity related to SP 500. Although there are some long -term expectations, you choose to reduce your exhibition with short -term fluctuations. Therefore, you will open a position in the Vix. Processing with Vix allows you to balance your assets by meeting potential losses to meet short -term profits.
What can investors learn with VIX?
- When VIX increases, this means that investors in the S&P 500 option market expect the market volatility.
- According to opponents of the market, the Wax Index is considered as much fear and more market as a purchase signal.
- Of course, the opposite is true. The less Vix, the less fear, the more comfortable market shows the market more comfortable.
What does fear and greed mean in Crypto?
If fear is dominant in a particular market, investors face fear of losing their capital. Fear in a market is usually associated with bear markets and prices. This can be caused by general economic factors such as inflation or stagnation. It is not surprising that crypto fear and greed indicators, with the fear that prices will fall even more, will be in extreme fear during the fall.
When greed prevails, investors fill their baskets and are excited about the potential benefits of the future. The greed in the market is usually associated with the bull market and the rise of prices. Interestingly, greed is often a kind of fear – fumo (fear of kidnapping something). These emotions instruct investors to buy.
How to read VIX:
Understanding VIX levels can offer valuable information:
- 0-15: The low volatility market shows stability.
- 15-25: Moderate fluctuations, but there is no excessive fluctuations in the market.
- More than 25: It points to high volatility with the growing uncertainty in the market.
- 30 and above: This shows significant fluctuations and perhaps the major changes in the market.
How to practice with Vix?
Many securities are based on CBOE wax prices, which provide investors with low and high volatility. The easiest way to invest in Vix is the Stock Exchange Investment Fund (ETFS) based on Vix Term transaction. Investors can buy and sell Vix ETFS like general stock. Most investors invest in 30 -day maturity products, as Vix Etfs are dangerous. This means that most investors do not hold positions in a long time. You can buy and sell VIX as follows:
- Open an account: If you do not trust VIX trade directly in the market directly, you may consider opening a demo account first.
- Learn how Vix works: Learning learning how to work and reviewing past Vix graphics will help you understand the changing prices over many years.
- Decide whether you want to go tall or short: If you are sure the wax will rise, it may be a good step to go for a long time. If VIX is expected to collapse, investors are usually held in short positions.
This article does not include investment advice or advice. Every investment and trade movement involves a threat and readers should do their own research when making decisions.
