Markets And Volatility

By all definitions the past two years have been pretty challenging to many retail traders and not surprisingly the exhaustion I sense in the comment section is palpable. A lot of what has transpired can be attributed to a marked increase in realized volatility which over time has contributed to a now permanently elevated baseline in implied volatility.

I’ve covered that phenomenon in my various long term market updates but today I would like to take a step back and hopefully squash a number of misconceptions about market volatility and also address how it may affect your trading reality.

However, people talk about ‘volatility’ all the time and often mean completely different things. So before we move any further we need to establish a clear definition of what volatility is and how we can measure it. To that end let me to walk you through the basics.

  • Mike
  • 3 years ago

About the Author

Hey there, I am one of the founding members of Red Pill Quants. I used to work as a systems engineer in Silicon Valley until I left the industry in 2008 to become a full time quant trader. It's been fun ever since.

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