Trading Volatility

This is the next installment in this ongoing study that I have been showing about trading volatility. I made this short term time frame matching system with the hourly and five minute chart for myself after a lot of trial and error. It is very easy to use once you understand how it works. The main thing you have to know is when to use this strategy and when not to. If you just sit there staring at the screen and trying to force trades like I see so many people doing, you will not succeed. You can not trade by guessing and saying ‘I think’. You must use clearly defined trading rules because if you don’t, you will just hand back any gains that you might make out of pure luck.

vol

Here on the NUGT daily chart you can see there was a nice double top off. There is no need to use the volatility method to trade that. I just use my standard method for that. On this most recent setup, as shown by the black arrow is when you can use the volatility setup. It is a bearish daily range breakout. There is a good target so we know there is plenty of reward compared to risk.

nugt-daily

Here on the 4hr chart we can see that there were three lower highs on resistance and then we got the failure of support. You don’t trade the choppy impulse waves. You wait for the break and then enter the trade.

nugt-4hr

This is how it looks on the 1hr and 5min chart. This is a 25% move for the day which can make your week in one trade. You just move the stop down and look for a reversion to VWAP by close. This is a day trade. You don’t want to hold this short overnight.

nugt-1hr-and-5min

If you click on this link it will open the chart with my volatility template in Trading View. You can then save the template layout. You dont have to have an account, the chart will open in the demo mode so you can try it.

My tradingview volatility template

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