The Secret To Trading Volatility 75 Index

One of the things I’ve learned from trading Volatility 75 Index is that you must get your entry right, because if not, the draw-down that may come if you pick a wrong trade can affect your equity adversely.

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As one of the indices on the Deriv Platform, trading Volatility 75 Index can give you a good return on your investment, so it’s important that you take time to study the market structure before placing any trade. If you don’t understand anything about market structure, read this article : The Complete Guide to Price action trading

As a rule of thumb, you can experiment on Boom and Crash, but not on Volatility 75, because any small move or a small change in price can affect your equity adversely.

How to Trade Volatility 75 Index

There is no special way of trading Volatility 75 Index. The pattern of trading Vol 75 is the same as with currency pairs. Just like currency pairs, the under listed are very important when trading Vol 75:

• Support and Resistance
• Trendlines
• Market Structure

The only difference with currency pairs is that V75 is very volatile; meaning you can make good money within the shortest possible time, if your entries are right.

How I analyze Vol  75 Index

I start analyzing Vol 75 Index from the daily chart. Analyzing from a daily chart helps me understand the market trend. Personally, I normally use the line chart to study the market, then use Candlestick chart to place trade.

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When using the line chart I focus on the closing price, which enables me to understand support and resistance. Once you can spot the major and minor support and resistance in the daily, you can have an idea of the market trend, then use lower time-frame to spot a perfect entry position for your trade

Fig 1: Vol 75 Indices Line Chart

Fig 2: Vol 75 Indices Candle Stick Chart

My Top rules for Vol 75

• Avoid ranging market structure, but if the distance between the support and resistance is big enough, you can trade between the range (that is: buy at support, sell at resistance) or wait for breakout because price can’t stay in horizontal structure forever (read more)
• Look out for the key zones (support and resistance lines)  on the daily timeframe and your trading timeframe. The key zones is what will guide you to draw your trendlines.
• Trendlines are fundamental component of trading; learn how to draw trendline.
• Always use proper risk management strategy (I mostly used 0.001 lot size)
• If you don’t know the trend of the market, don’t place any trade
• Volatility moves in a zigzag form, so if you can spot the formation of a ‘W’  of ‘M’ based on the market structure you can make money from the market.

I didn’t make much profit on my first week of trading Vol 75, but I started making crazy profit after 2 weeks of consistency. The only thing I did was that I discovered a strategy, test it on the demo, modified it, then use it on my real account.

When to Sell Volatility 75

The following conditions must be met before you place a sell on V75.

1. It Should be Overbought on the Daily Time frame:

This is very important, once you spot an overbought condition on the daily timeframe or on the 4 hour timeframe, you can go over to M5 to look for entry point. To get the overbought signal, you can use the settings on the screenshot below: Add Stochastic Indicator, then add alligator to the same indicator window as the stochastic.

Setting for Stochastic

Setting for Alligator Indicator

Your Chart Should look like this after adding the two indicators.

Your sell signal is when the 3 alligator line cross the 80 level of the Stochastic downward. However, this is a risky entry, to get a confirmatory entry, you need the price to bounce off your key zones (resistance zone in this case) on the chart. If it’s happen at a strong resistance zone on the chart, that is a very strong indication for a sell.

Secondly always be on the look out of the formation of the “M” or “W” shape on the chart. V75 mostly obeys this rule. If you look at market structure, you will see some major historical points on the chart. If I see a “M” formation for instance, I always wait for the formation of the ‘V’ within the “M” then sell at the top of the “V” to get the last leg of the “M”

Note: It is important that the conditions above are met, so that you can make good profit and not be scared of loses. 

When to buy Volatility 75

 It Should be Oversold on the Daily Time frame: 

Your buy signal is when the 3 alligator line cross the 20 level of the Stochastic upward. However, this is a risky entry, to get a confirmatory entry, you need the price to bounce off your key zones (support zone in this case) on the chart. If it’s happen at a strong support zone on the chart, that is a very strong indication for a buy.

Things you should know when trading V75

• Beware of stop loss hunt and the liquidity trap in the market; only close your trade in red when you notice a clear violation of the market structure.
• Volatility 75 is a very risky asset, it’s good to always have a clarity of where the market is going to, so do a top-down analysis of the market (look at the previous high and previous low, know the key points on the charts, etc.,) before placing any trade
• Finally, trading Forex is risky, always apply proper risk management

V75 Broker

The best broker for Volatility 75 (V75) is Deriv, you can sign up by clicking here.