Since our last analysis Eurex bund future has moved between the blue and yellow trend line, with shorter candles and a decrease in volatility. The potential downside movement is consistent but the yellow line is offering a very solid support. A further movement below this line will potentially be supported at 115.58. Then 115.15 and 114.53. Upside movement will find its first resistance at 116.43.
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FTSE 100 index is the underlying of FTSE 100 future. It is a share index constituted by the 100 most capitalised companies listed on London Stock Exchange.
This contracts is listed on Euronext derivatives exchange and it is quoted in index points worth 10 GBP per point. This contract attracts a large number of investors because it offers a good balance between value/volatility.
Our trading system is based on the nearest quoted month. Signals are usually sent just before the opening or during the trading day, depending on market conditions. Trading starts 8:00 and ends at 17:30 GMT from Monday to Friday.
This is an overnight trading system.
Currency = Great Britain Pound GBP
Contract size = 10 GBP per index point
Minimum price fluctuation (tick) = 0,5 index points
Tick value = 5 GBP
For more technical info click on www.euronext.com
The trading system we have developed is based on a trend following approach. We strictly follow this rule so we tend to reduce the number of trades during the year, to provide good entries on significant levels where we believe (statistically) that the market will bump or will break. We strongly believe in overnight and trend following trading.
Maximum Stop loss = 700 GBP
Initial Capital required = 15,000 GBP
Volatility most frequently refers to the standard deviation of the change in value of a financial instrument with a specific time horizon. It is often used to quantify the risk of the instrument over that time period. Volatility is typically expressed in annualized terms, and it may either be an absolute number ($5) or a fraction of the initial value (5%). Volatility can be traded directly in today's markets through options and variance swaps.
Having seen what is going on in financial markets and its crazy ups and downs, it is important to have a look at CBOE VIX volatility index. As clearly shown from the chart, VIX Index moved to a 52 week high at 37.57 with a percent change of 14.09%. This massive increase in volatily was generated by Fed rate cut (the biggets single reduction since 1990) and by a great sense of uncertainty. It seems that panic sellers and some funds have decided to reverse their short positions but they are ready to click on sell button again. We expect high volatility to last until ECB decision with VIX trading above 30% level until the end of the month.
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