Using $VIX to measure Volatility in $SPY

28 sie 2023

I'm sure many of you already know VIX (Volatility Index of the S&P 500) correlates to SPY (the S&P 500 micro index). For those who don't and those who do, this is my up to date VIX chart. Please comment what you think! But the general idea is that...

When VIX goes up, SPY goes down
When VIX goes down, SPY goes up

This is just one of the many comparisons I take into account when trying to gain a sense of market structure. Never use just one indication or signal to determine a trade. I also like to look at SPY vs DXY (US Dollar). The general idea is that...

When DXY goes up, SPY / stocks go down
When DXY goes down, SPY / stocks go up

Again, its important to have multiple things indicating the SAME signal offering high conviction trade ideas. And these "ideas" should be thought of in a way of PROBABILITIES not PREDICTIONS with a predetermined set stop-loss and profit target.

Pay attention to market events and released data, especially the TIME those data reports come out. I honestly look at SPY and VIX multiple times throughout the week, I do not have them side-by-side during my active trading as they don't perfectly mirror each other on any time frame. It's meant more for a larger timeframe (1H or higher) outlook and trying to gain a broader sense of sentiment in the market.

On that note..

Happy Trading !!

- E


VIX SPY DXY