The VIX Timing strategy is a forecasting tool which uses Chicago Board Options Exchange Market Volatility Index (VIX) in order to indicate buying or selling opportunities for broad-based indexes like the S&P 500 and the Dow Jones Industrial Average. The VIX is sometimes called "the fear index"; it represents implied volatility in the stock market for the next 30 days.

According to the rules described by Trent Gardner in his article "Using VIX To Forecast The S&P 500", orders are added upon the following conditions:

  • Buy order is added after the VIX has constantly been below its SMA during trend period,

  • Sell order is added after the VIX has constantly been above its SMA during trend period.

Input Parameters

Parameter Description
price The price used in calculation of VIX.
sma length The number of bars used in calculation of SMA.
trend length The number of bars in the period upon which the VIX is compared to its SMA.

Further Reading

1. "Using VIX To Forecast The S&P 500" by Trent Gardner. Technical Analysis of Stocks & Commodities, December 2012.

Backtesting is the evaluation of a particular trading strategy using historical data. Results presented are hypothetical, and there is no guarantee that the same strategy implemented today would produce similar results.

Technical analysis is not recommended as a sole means of investment research.

For educational purposes only. Not a recommendation of a specific security or investment strategy.

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