Where is the Volatility? this is the question you would be asking yourself if you are a frequent short term trader in this market. Recent market movements are filled with choppiness/whipsaw and compressed in a very tight narrow range. Trading opportunities are often very less in this kind of environment unless the India VIX moves above 18.
India VIX
Currently we are facing historically low volatility (India VIX – 11.62) which grinds up the traders in both the sides as trendiness in the markets are hardly visible in the shorter timeframes. However on the International Markets CBOE VIX is at 5 month high due to prevailing global tension. There are arguments over the web that INDIAVIX cannot be remain muted for a very long time as VIX often shows cyclic behavior.
CBEO VIX – US Market
Even if you have a directional view its better not to make too much of trades is one of the best habit to adapt in a low volatile environment. Despite that anticipating the trend and taking more trades often vulnerable to faster erosion of the capital. Also to be remembered that this the phase where the trading systems shows consecutive lossing trades especially when the markets are trading in a short term range with ultra low vix.
Without volatility what we can see is just a investing market rather than a trading market. However on the other hand if we are likely to follow the global market volatility then there is a good news for you. We could see some more increased trendiness in the upcoming trading sessions. Hope this earning season brings more volatility and trendiness!
Nice article Rajandran your analysis is spot on Volatility of the Indian market is going very low and it’s not suitable for the trading market.
Post the results the vix should move.