Glossary
Volatility Trading
Trading strategies designed to profit from changes in market volatility.
Volatility trading uses indicators such as ATR, Bollinger Bands, and the VIX to measure and trade changes in price dispersion. Strategies include breakout systems, range trades, and options plays.
Key Points
- Volatility is mean reverting over long periods.
- Rising volatility often requires smaller size and wider stops.
- Different assets have different baseline volatility levels.