vix tool (idea)

[Orios]

i have no idea how to use/do think script, but here's some trade logic i use day to day. if someone can translate that into code.. it could help clear a lot of mud as far as when to get bullish and when to get bearish.

vix operates in 3 modes. its flat, inverted, and normal
-roughly 80% of the time vix stays in its normal state
-roughly 15% goes into an inverted/backwardated state
-roughly 5% it goes into a flat state.
- when vix goes inverted, its showing that the near term demand for protection is elevated
- this is why when markets tends to jump out the window down, but the escalator up

idea:
so there's 3 components that matter here, vix cash (vix index), vix futures month 1, vix futures month 2

the challenge:
vix normal : vix cash below vix month 1 futures but month 1 is less than month 2 (color green)

vix flat: vix cash slightly below or equal to vix month 1 but less than month 2 (color yellow)

vix backward: vix cash above vix futures month 1 (orange) but less than month 2. vix cash above vix futures month 1 and month 2 (color red)

 

[BenTen]

Got any examples or trades based on this idea?

 

[Orios]

@BenTen well real time if you want to watch whats happening in the market

vix cash is the dashed line -------------
m1 is month 1.
m2 is month 2.
its how most futures markets operate. i only say month 1 month 2 because thats what retail etp's focus on in their holdings/swaps

That brings up a new challenge. These Futures roll every month

 

[horserider]

@Orios Not even sure what you want. Just playing around but does this look like anything. Supposed to be VIX and Month VIX.

 

[Orios]

@Orios Not even sure what you want. Just playing around but does this look like anything. Supposed to be VIX and Month VIX.

sorta kinda. its not based on price action, the relation between futures months and actual demand market abroad. i use that site to watch it maybe i just need to invest in another monitor? lol
80% of the time things are orderly/spx drift up. but 15-20% of the time spy takes a major dump based on demand for protection. usually the curve will flatten before inverting in vix.
so when it flattens you have a preemptive warning the market is about to turn bearish

 

[horserider]

Ok I never traded futures so have no idea.

 

[Orios]

@BenTen so real time vix futures curve is flat but still slightly inverted. so from a trading stand point this is where bearish momentum has a extremely likely chance to strike. im short the market based on the vix term structure still showing protection in the near term is in demand.

 

[amalia]

Gonna have to hardcode the /VX month structure to view this strat historically but you can get away with using VIX/VIX9D/VIX3M unless someone else knows otherwise.

 

[amalia]

.

 

[amalia]

You'll see Green and Yellow because both descriptions are fairly the same.

 

[Thomas]

I wanted to share my "VIX," Goodies on this important morning.... http://tos.mx/1XdFPWh

 

[Trading51]

I wanted to share my "VIX," Goodies on this important morning.... http://tos.mx/1XdFPWh

hello, thank you, question your chart says LOOK for BUYS is that referring to something like SPY when it says Trigger new buys now?

 

[Thomas]

hello, thank you, question your chart says LOOK for BUYS is that referring to something like SPY when it says Trigger new buys now?

I think I changed the "SPY," to "QQQ," as it's the leading indicator of Tech, but should be one or the other.....and yes, it's a timing tool.....

 

[samoya]

@amalia Its an sold tool and its useless from my point of view. mastersintrading.com