I rub VIX on my chest

VIX is something that is referred to a lot these days.  When I started learning about the stock market, I would read a lot of bloggers referring to the VIX (and other indicators).  To be honest, nearly nobody knows how the VIX is computated or the true meaning behind it.  Including me.
The VIX was first written about in 1993 by professor Robert Whaley (funny looking guy).

In retard terminology, the VIX is a quote in percentage points, of the expected movement in the next 30 days for the S&P 500 index, on a annual basis.  Since this isn’t even retard translatable, I’ll give an example instead.

If the VIX is 15, than the expected annual change of the S&P 500 is 15%, so someone gambling with index options can expect the to move either up or down 15%.

Since the 15% is based on a yearly basis, you would divide 15% by square of 12 (months in a year) and get 4.33%:

So if the S&P 500 is at 1,000 than index options are priced with the assumption of a 68% likelihood (one standard deviation) that the 30-day change in the S&P 500 will be within 43 points up or down.

Now if that wasn’t bad enough, this is all based on a mathematical computation, which is based on the same information that the TRIN and TICK and every other chart you have ever seen is based upon… are you ready for this?  Take a deep breath… here goes. 

ALL OF THIS INFORMATION IS BASED ON THE PAST!

Yes, you do know that it’s true but you never think about it much.  All charts and indicators are based on history.  History does not always predict the future.  If you were to check into some of the most common charting patterns, you would see that there’s usually no greater than 60% of a chance that a stock will predict in a certain matter based on a historical view to the future.

I bought a book about 6 months ago when I started getting serious about trading and more serious about not losing money in the stock market.  The book is about the Japanese candlestick pattern readings.  Though the book is very, very useful if you are unfamiliar with candlestick patterns, it’s still useful if you just don’t know it all.  After reading the book, I learned that I didn’t actually know it all.  More importantly, I’ve learned that nobody knows what’s going to happen in the future.  If you are slightly interested in checking out the book, click on the picture below and it will take you to the Amazon site where the book is available (and it will give me a baby percentage of the purchase price if you buy it!).

(notice that I don’t just claim to have bought the book, hoping you do the same, I actually tell the truth about it!)

So buy yourself the book if you don’t know it all.  If you do, you should buy two of them so you can read it twice.

Now when you open the book, you’ll see a nice setup showing you that there were a number of historical trades performed using history of stocks and their prices and will learn that normally using charting only gives you a 50-60% chance of being right when taking a trade that seems like it’s golden.

There you go, some info and a plug in order to maybe make $.12 when someone clicks to buy a book.

Thanks for reading!