What is the VIX-Fear Index and Why You Should Know About It!

In the near future, you will always need to look at the “Fear Index” or VIX to understand how traders and investors “feel” about the market. VIX is the symbol of the Chicago Board Options Exchange Volatility Index. This measures the movement of each major market. In other words, as VIX rises, volatility [stock / option movement] rises. It ’s very easy. Why did this become the “Fear Index”? Simply put, when people are afraid of the market, VIX goes up because they tend to sell and trade more than usual. The sale may increase VIX significantly.

The problem with VIX rising is that volatility increases investor risk [those who don't trade more than four times a week]. The rise in VIX is only beneficial for day traders [those that trade stocks / bonds / options / ETFs several times a day during market hours]. . Investors [for example, investors with retirement plans], on the other hand, have long-term profits with little trade in the short term [especially when most retirement plans are mutual funds], so indefinitely Only at risk]. However, as VIX rises, investors buy in the market when they drop below 1%, buy PUTS [see previous article on this topic], set a trailing stop on individual investments, etc. There are ways for investors to be more careful. These may sound simple, but will help save you from great losses. Another investment you can make is precious metals. When VIX is launched, gold tends to work exceptionally [if there is anxiety, investors will invest in relatively safe bonds such as gold and precious metals and inflation-safe types of investments]. This is not always the case, but history shows that this is accurate.

The volatility index is an important indicator of the type of market you are investing in. If you are a day trader, I want to raise VIX as much as possible. When you are an investor [most people are] you want it to be relatively low or in a steady movement. One thing is certain: once you get used to VIX, you can predict very accurately where the general market is heading.