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I'm going to share a quick pro trading secret with you today. Don't worry – I won't get kicked out of the elite traders' club for sharing it, but you'll definitely impress your friends if they get a look at your account balance.
The Chicago Board Options Exchange Volatility Index, the VIX, has been pretty hot this year, running anywhere from 12.1 to 25.4. It didn't dip below 15 for all of August. What's that tell you? That the market's moving more than usual! What I mean is that moving up, down, all around – it's enough to send most investors into a tailspin.
There's no reason to expect that turbulence to subside for the rest of the year. Geopolitics, seasonality, trade, the economy, and even the president's Twitter feed will keep the VIX action hot.
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In other words, strap yourself in – because it's going to be a volatile three months to round out the year. Above all, don't be scared. Remember my Eighth Commandment of Trading: "Volatility is a trader's best friend."
That's right; as traders, we need volatility because a market that's moving means a market full of opportunities.
So that you're better able to capture every single one of those chances, I'm going to show you a tweak pro traders use when markets get chaotic.
It'll take you about four seconds to get the hang of this – and even less time to see how powerful it is. You can start using it immediately to spot chances and rake in profits at a time when, typically, slower traders are giving their profits back to Wall Street.
About the Author
Chris Johnson is a highly regarded equity and options analyst who has spent much of his nearly 30-year market career designing and interpreting complex models to help investment firms transform millions of data points into impressive gains for clients.
At heart Chris is a quant - like the "rocket scientists" of investing - with a specialty in applying advanced mathematics like stochastic calculus, linear algebra, differential equations, and statistics to Wall Street's data-rich environment.
He began building his proprietary models in 1998, analyzing about 2,000 records per day. Today, that database, which Chris designed and coded from scratch, analyzes a staggering 700,000 records per day. It's the secret behind his track record.
Chris holds degrees in finance, statistics, and accounting. He worked as a licensed broker for 11 years before taking on the role of Director of Quantitative Analysis at a big-name equity and options research firm for eight years. He recently served as Director of Research of a Cleveland-based investment firm responsible for hundreds of millions in AUM. He is also the Founder/CIO of ETF Advisory Research Partners since 2007, noted for its groundbreaking work in Behavioral Valuation systems. Their research is widely read by leaders in the RIA business.
Chris is ranked in the top 99.3% of financial bloggers and top 98.6% of overall experts by TipRanks, the track record registry of financial analysts dating back to January 2009.
He is a frequent commentator on financial markets for CNBC, Fox, Bloomberg TV, and CBS Radio and has been featured in Barron's, USA Today, Newsweek, and The Wall Street Journal, and numerous books.
Today, Chris is the editor of Night Trader and Straight-Up Profits. He also contributes to Money Morning as the Quant Analysis Specialist.