/biz/ - Business & Finance

>>53900324
>>53900345
Lo and behold "buy the dip" actually does work as long as you don't buy what you *think* is the dip and it keeps on dipping. You want to anticipate a rebound and buy just before (or just after it starts). Bottoms are built on sentiment and maximum bearishness when everybody has been shook out and are fully hedged up with puts. At that point is when the reversal happens and the market turns around. Since you don't have access to order flow to know when everybody has bought you have to use a proxy. The ratio between different VIX cash settlement months is about the best proxy you have. Just using VIX itself gives too many false readings but the ratio between different months tends to be much more accurate. Ideally you want to have several confirming indicators, VIX above 30, ratios below 1, maybe look at the IV of the different SPX at the money calls and see when it's at a high indicating people have bought a lot of puts. When all of this stuff dovetails it's time to buy with leverage
>>53900463
Yeah but it triggered in October which is when you would have gone all in. FWIW I consider the exit signal to be when both the charts break above the top line (in addition to other things I look at) which would have gotten you out on December 2nd right before the mini-dump. I'm in cash right now waiting for the next entry. I have made a ton of cash swing trading using VIX ratios