In the next few minutes I am going to show you a step by step guide on how to trade volatility indices using the institutional strategy. If you blow up your account after reading this post, then just maybe, trading is not for you.
One of the best and easiest way to be successful in trading Volatility Indices is to use what I called the institutional strategy. Personally, I enjoyed this strategy because it is simple, straightforward and even newbies can understand it easily.
Let dive in on how to trade volatility indices using the institutional strategy
Table of Contents
How to Trade Volatility Indices using the Institutional Strategy
1. Analyze the chart using the daily timeframe.
The Market Start daily with either an “A pattern” or “a V pattern”. The “A pattern” is a first a bull structure where the market moves up in a zig zag format, before meeting a resistance point and retraces back to form an “A pattern”. While the “V pattern” start with a bearish structure before meeting a support and retraces back up to form a “V pattern”
If you want to trade the A pattern, even if you don’t understand anything on Forex, watch the candle stick pattern, once the price breaks the previous low as the bull momentum is gathering, look for a sell entry at the next resistance point. The same thing goes for the “V pattern”, once the price break the previous high, look for a buy opportunity.
2. Trade using the 5 minutes timeframe.
You can locate this pattern in all time frame, but I personally use the 5 minutes times frame to take the trade after doing an in-depth analyzing using the Daily timeframe. If you open your chart and look at market history, you will understand while this pattern should a part of your trading strategy.
3. Anticipate all Market move before it happened using the market structure.
Most Institutional traders depends on Market structure to guide their trading decision. They mark every support and resistance point on their chart and once price breaks a structure the move in and make money. Learn how to read market structure. You can’t be a successful trader if you don’t know how to read the market structure.
4. Develop and maintain a good trading psychology
You have to learn how to control your mind and emotion. Trading is not gambling, so you need to develop a good trading psychology and take trades only when it is in line with your trading strategy.
5. Understand proper risk management
Risk Management is key to success in trading. The institutional traders understand the risk management concept, thus even with their big equity, they management they learn how to control the market by risking effectively.