Day Trading? Is this the answer to volatile markets?
My answer is definitely yes.
The economic world is changing in front of our eyes every day and we are probably approaching a significant point of explosion because of the growing debt burden every day. Since the range of opinions on this issue is great, we are expected to continue to see increased volatility, which reduces the possibility of generating significant profits while maintaining a low level of risk.
Most of the risk to traders stems from holding stocks overnight due to the increasing volatility.
This means that strategies which invest most or all the money at their disposal and hold the overnight position, will be exposed to high volatility that will sometimes be insufferable to investors.
The impossibility of being exposed to the market by a significant percentage, reduces the risk but also the yield potential.
In order to produce high returns while maintaining a low level of risk, we should eliminate exposure to the market by night and invest all the available funds.
The only option to do that is by day trading.
Day trading gives us absolute control over the risk and on the other hand the wonderful possibility today to enjoy the high intraday volatility.
A successful strategy of this kind can function as a complementary strategy to other strategies or even as a single strategy, at least until we see the market coming back to itself.
Recently, I started a new strategy of this type that trades only within the day and will not hold position overnight. It buys and sells volatility (VXX) with almost (95%) of the available funds. Due to the high volatility, it will not be a surprise to see it generates significant profits.
The strategy is VIXTrader Day Trading and it has just started.
The idea behind this strategy is similar to the one behind VIXTrader and VIXTrader Professional. More than 50 different trading strategies that operate simultaneously in both trading directions, long and short.
I think it might be a good idea to test it through a simulation before signing up. It is also good idea to allocate the right amount of money in relation to other investments exposed to the market overnight.
I also think that the developers here should try and see if their strategies can be turned into a day trading strategies in order to complement the strategies they have today and to reduce the overall risk of their exposure to the market.
Anyway, as long as the high volatility is with us, all my other strategies will continue to maintain strict risk management. Of course, once the volatility begins to decline, the exposure to the market will increase accordingly.