Last week, we talked about the importance of trading markets that move in fairly large ranges. Today we will look at adjusting your stops to reflect added volatility.
One of the best trading edges you can get is to listen to the markets when they talk to you. Last Thursday, April 1, was one of those times.
Last night we had three CVR buy signals (and three other confirming buy signals) on the Market Bias Indicators page in spite of the stock market dropping for the day.
Last Thursday, March 11, we talked about trading CVR signals with options, especially CVR buy signals. These trades are particularly effective because when the signal is correct, you have the three main features of options working in your favor: time, price direction, and volatility.
Today I’d like to share some option strategies you can use to exploit CVR sell signals. There are two strategies available to exploit sell signals. The first is to sell calls. If you are right, time and price will be in your favor, but implied volatility will work against you.
I will delay part two of “Trading Options with the CVR Signals” (see my commentary from March 11) until Thursday, March 18 so I can share with you a somewhat rare, but solid, set-up that occurred the other day.
Chart analysis is a subjective game, and many commonly accepted interpretations of patterns fail to hold up to detailed analysis. We’ll explain the realities of large-range days and the kind of market behavior they foreshadow.
Watching Volatility on Different Time Frames
The theory behind the CVR (Connors VIX Reversal) signals is that volatility will revert back to its mean (average).
In a previous article, I talked about how and why multiple signals are superior to