You guys have probably heard about VIX 75 aka Volatility Index in the trading arena but might not know how it works in real-time trading. Basically, it measures the risk level in the market with its regular patterns and proper trading approach. So, without further ado, let’s get into how VIX 75 works and how can you trade it with ease!
What Does It Mean By Volatility 75 Index?
VIX75, VOL, or volatility index 75, whatever you want to say, will forever use to measure the volatility of the S&P500 stock index, which widely follows the index of large-cap US stocks. It calculates using options prices on the S&P 500 index and reflects the market’s expectation of future volatility over a 75-day period.
The VIX75 often refers to as the “long-term index” because it reflects a longer-term view of volatility than the more commonly cited VIX index, which measures expected volatility over a 30-day period. Some investors and traders use the VOL as a way to gauge the market’s overall level of risk or to help make decisions about portfolio diversification and risk management.
Furthermore, it is important to note that the VIX75 is not a directly tradable asset and can’t buy or sell. But there are a variety of financial products, such as futures and exchange-traded funds (ETFs), that track the VIX75 or provide exposure to it. Investors can use these products to potentially profit from changes in market volatility.
Why Should You Trade Volatility Index 75?
There are several benefits associated with trading it but the timeframe is also important in order to leverage them. Hence, the best time to trade VIX75 is when the US clock zone overlaps with the Europe time between 12 to 16 GMT. Hence, do consider maximizing the benefits during this time zone. Now, let’s proceed to the benefits of trading the volatility 75 indexes!
1. It widely uses as a proxy for market volatility and can help traders gauge market risk. When the VIX is high, it indicates that market participants are expecting higher levels of volatility in the near term. Conversely, when the VIX is low, it generally indicates that market participants are expecting lower levels of volatility in the near term.
2. The VIX75 index provides traders with insight into market expectations for future volatility, which helps them manage risk in their portfolios. This can allow traders to adjust their positions accordingly and mitigate risk.
3. Trading the VIX75 index can provide diversification to a portfolio by allowing investors to take positions on market volatility as it’s not directly correlated to traditional asset classes such as stocks or bonds. Investors can hedge market volatility and protect their portfolios against potential losses. For example, if their portfolio is heavily exposed to stocks, they can go long on the index to safeguard against market drops. Similarly, they can short the index if they have a lot of fixed-income assets.
4. The VIX75 index can use as a useful tool to gauge market sentiment, as it reflects the level of anxiety or optimism among market participants. For example, a high VIX75 index indicates that market participants are bearish and anticipate prices to fall, whilst a low VIX75 index shows that market participants are bullish and expect prices to increase.
5. With its high volatility, the VIX75 index can provide opportunities for traders to profit from price movements. However, it is important to note that trading the VIX75 index carries a higher level of risk and requires careful analysis and risk management.
What Can VIX75 Do For Your Forex Account?
It’s definitely impossible to win all the trades in one go because trading is not an overnight game. It takes ages to become a successful trader with maximum winning trades under your belt. Hence, it’s time to be realistic now by stopping expecting to successfully trade the volatility index 75 within a short period, instead; you should consider growing your forex account with VIX75. Here’s how you can do it!
Consider Your Lot Size
The lot size is a very simple concept: it refers to how much money you have in your account at any given time. The larger your lot size, the more you can trade and the higher your profits will be. When trading the Volatility Index 75, use small lot sizes that do not exceed 0.002. If you have a large account, use the same strategy as the market makers and divide your entrance into 3 to 4 smaller lots. And if your account is less than $100 USD, don’t exceed 0.001.
It is generally not a good idea to stack randomly while trading any asset, including VIX75. Stacking involves holding multiple positions of a particular asset simultaneously in the hope that the overall value would increase. When traders stack randomly, they may not have a clear strategy or plan, which can lead to erratic and irrational buying and selling behaviors. This can disrupt the market and create uncertainty among other traders, which can ultimately lead to a decrease in overall market efficiency.
Trade With Stop-loss
Without a stop-loss, you may end up losing a significant portion of your account if the market moves against you. It can also lead to emotional decisions, which further increases the risk of losing money. Hence, it is important to always have a risk management strategy in place, including the use of stop-losses, to protect your account and minimize the risk of significant losses.
Don’t Rush Too Fast
As said before, you cannot begin earning money on the first day of trading VIX75. It will take some time for you to grow and comprehend how FX marketing works in real-time. However, if you do not choose to grow steadily and lose consistency in between, the risks of losing your investment become quite high. As a result, before starting on any new investments or trading techniques, ensure that you have a target-based trading strategy established. By keeping this in mind, you can avoid making overly risky deals just because they appear profitable at first glance.
Trading Volatility Index 75 is certainly a good idea in terms of growing your forex account or making some good profits. But it’s a long-term deal so you will have to go with proper planning regarding the profit, loss, revenue, and investment amount. Without a proper plan, it will be hard for you to stay in the game in the long run. Hence, go accordingly!