Volatility: Traders' dreamland

It has been just 12 days since we entered 2015 and in terms of trading days, we have only got 7 days. In this extremely short period of time, we have gone through a lot if you are watching the markets. The stock market is extremely volatile; it has been swinging 3-4% within days (see below). Think about it: in the past 5 years, the stock market has rarely corrected by over 5%. This is kind of volatility people have forgot about but it is really traders' dreamland.

 

I'm not a trader as my daily job does not allow me to watch the market closely and act timely which is the essence of a trader. But I still can use the evenings to do some research and make some orders to try to catch some short-term opportunities. Indeed, I was luck enough to make some trades successfully in the past 7 trading days and have made some quick profits. Basically, I used SDS, VXX, or VIX to trade the extremes of the market. As I said many times before, you have to bet against the herd: when they are extremely bullish, you have to be short betting for the market to go down. Conversely, if they are extremely bearish, you have to be long betting for the market to go up. This is how the small number of successful traders make money from the large herd of so-called investors who mostly just lose money. Don't be part of the herd!