Stocks & Commodities V. 31:2 (10-13): The Volatility (Regime) Switch Indicator by Ron McEwan

Stocks & Commodities V. 31:2 (10-13): The Volatility (Regime) Switch Indicator by Ron McEwan
Item# V31C02_482MCEW
$3.95
Availability: In Stock

Product Description

Shifting Gears

The Volatility (Regime) Switch Indicator by Ron McEwan

Here’s how you can construct a simple Excel spreadsheet for the volatility switch indicator.

Which trading strategy should you use? This is a dilemma that most traders face, especially when the market changes its trend, which seems to be the norm these days. You may be dealing with a market that is reversing direction every few days, and without warning, the market breaks out into a lengthy trend that catches you off-guard. By the time you can adapt to the new mode, you could have sustained a considerable drawdown.

Regime switching

Years ago, some very clever individuals came up with methods to cope with abrupt and dramatic changes. This concept was labeled “regime switching,” a method for adapting a trading strategy when the market changes from a trending mode to a mean-reverting one.

Many regime switching algorithms are available today. They generally involve complex mathematical algorithms. At the heart of most of the regime switching strategies is a measure of volatility. The direction of volatility, rising or falling, as well as the level of volatility, will give a good indication of whether the market is in a trending or mean reversion mode. As a basic first step, this article will explain how to construct a simple volatility switch indicator to assist in determining whether your security of choice is trending or in a mean reversion mode.

To start, you should have at least one year’s worth of data for your security. Three to five years (or more) will give you a more reliable picture of how the security reacts over time to change in volatility.




FOR THOSE ORDERING ARTICLES SEPARATELY:
*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.




Take Control of Your Trading.
Professional Traders' Starter Kit
All these items shown below only $299.99!
  • 5-year subscription to Technical Analysis of STOCKS & COMMODITIES, The Traders' magazine. (Shipping outside the US is extra. Washington state addresses require sales tax based on your locale.)
  • 5 year access to S&C Archive
  • 5 year access to S&C Digital Edition
  • 5-year subscription to Traders.com Advantage.
  • 5-year subscription to Working Money.
  • Free book selection.
  • Click Here to Order