I've been tweeting about Vix/Vix6m a lot of late. I should explain a bit behind my embrace of the spread as a useful tool. a not short thread. My trading experience began as a market making local.
I traded intraday on massive margin 500mm. I had to take risk and limit that risk
I traded intraday on massive margin 500mm. I had to take risk and limit that risk
2/I had to be fast and accurate and know when I was wrong, exit quickly.I left the floor in 99 when they cut tic prices and embraced screen trading. As my risk remained the same but the noise grew making it harder to be as profitable. I sold my membership and funded my wife's biz
I went into the mortgage business and quickly realized I did not want to originate loans. I did a stint at JPM Chase during the refi boom and shifted into management and MBS trading and securitization. I ended up at GE a few years before the GFC. GE shut the operation down
I took a month off went to the north woods came back and really funded my personal trading account and embraced learning to trade off the floor. This was mid 08. I got my ass kicked. My old edges were gone or not applicable. I was bleeding money and loosing faith in my skills.
The Montessori school we started in 2000 and that cash flow along with savings helped pay the bills. I went to Culinary school and went to work in kitchens to learn.I was burned out at 47.
While I was doing that I spent years finding edges that worked for me.
While I was doing that I spent years finding edges that worked for me.
I found that my best edge was time and my second best edge was loss avoidance. A complete shift from how I learned to trade. I learned I needed a smarter safer way to fade the market while minimizing risk and find key entry levels. I turned to options and inverse ETF's.
I got my butt kicked again but not from a loss of capitol, rather from a slow growth of profitability. This took place from 2008 to 2014. I had limited my risk to the point I didn't see gains.
The options market was booming and the market was trending into 2018 due to the QE/QT
The options market was booming and the market was trending into 2018 due to the QE/QT
Shift. the VIX woke up. I was making 15% on trades fading vol with minimal exposure. I expand my research and picked good entry and exit points and captured some profits out of the chaos. I didn't get rich but I did become more confident in my trade. Confidence is key.
I took what I still believe to be a gut level understanding that I learned on the floor, curves invert in times of stress and those moment offer great opportunity and applied it to "range bound" volatile markets that captured both fear and complacency.
VIX was my lever. When the Vix is spiking the underlying macro supports it. No need to step in with an opinion, wait for it. When vix is complacent look for stress. That led me to the leading indicator I've used for the last 4 years. Its probably time to reinvent again
Nothing here is investment advice. I use twitter to think out loud for reference. I should say that who you follow for trading ideas is critical.
I'm not saying you should follow me but I am saying that you should be a skeptic of folks selling services or that are believer.
I'm not saying you should follow me but I am saying that you should be a skeptic of folks selling services or that are believer.
that said I have found a few folks I like to follow. I will expand a bit in the future but I think these capture my wheel house.
@bclund
@CanteringClark
@paxtrader777
@EpsilonTheory
@hussmanjp
@pointsnfigures1
@MrBlonde_macro
@bennpeifert
@pinebrookcap
@RJRCapital
I respect their honesty and transparency. I have more to add at a later date cheers and Best of Luck!
@CanteringClark
@paxtrader777
@EpsilonTheory
@hussmanjp
@pointsnfigures1
@MrBlonde_macro
@bennpeifert
@pinebrookcap
@RJRCapital
I respect their honesty and transparency. I have more to add at a later date cheers and Best of Luck!
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