I’m going to cover two important topics today which both relate to realized volatility (RV) and in particular how to trade your way around it. If you’ve been a trader for a while then you probably have noticed that volatility profiles differ substantially on the short term when compared with the long term. In essence volatility has a tendency to decrease toward the long term. Nevertheless many traders treat those charts the same when designing their systems, e.g. how and where they enter, where they place their stop loss, and how they handle campaign management.
And we are officially ticking in 2017! I trust you enjoyed a memorable holiday season and are now ready to slowly abandon each and every New Year’s resolution you committed yourself to just last week. Personally I’m pretty proud of myself as I survived yet another Christmas without adding a single pound. Plus I spent much of the past 10 days collaborating with Scott and a few others on an improved version of Scalpius. I’ll be sharing more on that that as we’re forward trading the system over the coming two months.
Did I mention that I hate winter? I wish I could tell you that I am all back to my normal devious self, but unfortunately I’m still trying to shake what has turned out to be one nasty head cold. My wife’s actually had it for almost a week now as well as apparently every other Spaniard we hear walk by our house judging by the incessant coughing and sneezing. Honestly I think this will be the last winter I’ll be spending over here in Europe. Even down here in Spain the humid weather and short daylight hours eventually catch up with you. I was actually considering to make an emergency run for the South but even in Tenerife it’s only a few degrees warmer with rain [...]
It seems like along with a new POTUS (which one exactly still remains to be seen) we also seem to be getting an entirely new FOMC monetary policy, as Yellen appears to suddenly have discovered new faith in God and higher interest rates. The increase in the federal funds rate to a range between 0.5% and 0.75% was expected but came along with the prospect of brisker monetary tightening. And not surprisingly all hell broke loose… well, at least over in forex and precious metals: