Live Volatility Index (VIX) ChartBelow, a live chart of the VIX.
Spread Betting and the Volatility Index: Gauging FearAccording to Joshua Raymond, Market Strategist, CityI ndex, “A high VIX indicates trader fear and a low VIX indicates trader calm”.
In general, the Volatility Index rises during periods of financial stress and falls in less anxious times, giving an indication of the percentage the markets are expected to move up or down by.
For example, in January 2011 the FTSE 100 hit new 32 month highs before falling 4.5%.
The Volatility Index is widely seen as a way of predicting this kind of near-term volatility, and so traders who follow the VIX may have been better prepared for the trading activity that ensued during January.
Spread betting carries a high level of risk. You can lose more than your initial investment or stake. Spread betting may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.