August 2011
Intermediate to advanced
262 pages
5h 40m
English
Chapter 11
Volatility Matching
Matching stock volatility to the appropriate vibrational construct will yield greater profitability in the long run. This is an important technique because it helps to generate a greater profit with less total allocated capital. Let us now examine the three volatility matching techniques.
There are three main volatility setups:
1. Historical Range Volatility (natural volatility)
2. Event Trading (high volatility)
3. Range Zoning (medium to low volatility).
Historical Range Volatility (HRV)
Look for a high daily volume ETF. It should display an HRV with high PLR and BLR and be actively volatile throughout most of the range. You can use the ATR indicator to gauge the average daily or weekly volatility, then customize the scaling intervals according to this value. Commodity ETFs and some ETFs with fewer component stocks are good candidates for volatile behavior. (Also note that many leveraged ETFs have very large daily ranges, but be mindful of the daily reset feature, unless you are rebalancing the sharesizes daily.)
To locate volatility in the market, look for high daily, weekly, and monthly ATR and stock beta value. You should also consider the range activity for each of these periods. You may use any popular scanning software or manually perform the scan by eyeballing charts of typically high volume stocks.
Event Trading (High Volatility Trading)
Look for major economic events and announcements, like reports, meetings, or earnings.
For best results, ...
