Muinalis way of learning how to trade options
- Thread starter muinali
- Start date
as i can see you opted best strategy among for good timeframe if you have taken trade only because of vix(index volatily) then little confusing to me.trend not change till now neither in daily chart nor weekly.
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Yes, as Dan sir has also described Bolinger Band technical indicator also gives us a good indication of your stock or index's Implied Volatility .
When the bands are narrow, your underlying is experiencing low volatility.
Chances are your stock or index is also in an uptrend.
In contrast, if the bands are wide, then implied volatility is high.
This makes sense as the upper and lower bands represent a 2 standard deviation move from the simple moving average. most of time stocks and index stay in this range 95% of the time.
The Bollinger squeeze can be used to help identify major trend changes. Traders will often use this together with other technical indicators to try to predict which way the market or stock will “break”.
Non-directional traders find it useful as a “warning sign” that a significant price move may occur.
Remember, Bollinger bands are based on using a simple moving average (usually 20 day) and an upper and lower band. Both the upper and lower bands represent a two standard deviation price move. So the price should stay inside the bands 95% of the time.
Why a 20 day moving average using bollinger bands? This is the "standard setting". However, it makes sense for non-directional traders because you will likely be out of most of your trades in 20 days or so.
The Bollinger squeeze is based on the idea that the market in general goes from times of high volatility to low volatility, then back to high volatility. Low volatility can be seen when the bands contract or get close together.
After a long period of low volatility in the markets (quiet period) the market will sometimes “break” fast into a new trend direction.
As of now, from first week of december nifty trading very narrow range.
Have a look at nifty chart
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what will happen next,god knows better,we can assume onlyyyyyyyyyyyy
When the bands are narrow, your underlying is experiencing low volatility.
Chances are your stock or index is also in an uptrend.
In contrast, if the bands are wide, then implied volatility is high.
This makes sense as the upper and lower bands represent a 2 standard deviation move from the simple moving average. most of time stocks and index stay in this range 95% of the time.
The Bollinger squeeze can be used to help identify major trend changes. Traders will often use this together with other technical indicators to try to predict which way the market or stock will “break”.
Non-directional traders find it useful as a “warning sign” that a significant price move may occur.
Remember, Bollinger bands are based on using a simple moving average (usually 20 day) and an upper and lower band. Both the upper and lower bands represent a two standard deviation price move. So the price should stay inside the bands 95% of the time.
Why a 20 day moving average using bollinger bands? This is the "standard setting". However, it makes sense for non-directional traders because you will likely be out of most of your trades in 20 days or so.
The Bollinger squeeze is based on the idea that the market in general goes from times of high volatility to low volatility, then back to high volatility. Low volatility can be seen when the bands contract or get close together.
After a long period of low volatility in the markets (quiet period) the market will sometimes “break” fast into a new trend direction.
As of now, from first week of december nifty trading very narrow range.
Have a look at nifty chart
Uploaded with ImageShack.us
what will happen next,god knows better,we can assume onlyyyyyyyyyyyy
it says that non-directional trader take their strategy position in one standard deviation range
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