buy the vix indicator
Most investors think of the VIX Indicator (VIX) as the "fear gauge."
True to form, the old saying with the VIX is, "When the VIX is high, it's time to buy."
But experts look at the VIX as much more than just an index.
They view the VIX as possibly one of the best contrarian indicators in the business.
While most investors are scrambling to figure out whether the market's headed up or down, savvy pros use the VIX both as means of protection and a source of profit.
"It gives you an idea of how uneasy people are about the markets," Joe Levin, vice president of product development at the Chicago Board of Options Exchange (CBOE) told CNNMoney.
That is, it tells you whether or not the markets have reached an extreme level of sentiment - either bullish or bearish.
More often than not, it is the action in the VIX that signals major market tops and bottoms.
But before we get into how to use the VIX, we need to understand what the VIX actually is.