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A Few Ways For The Macro Trader To Use Volatility

Volatility is the bane and a blessing of our existence as traders.  Without it we can’t make money but the only time we lose any money.  Yes, as global macro traders we need and kind of crave volatility as it seems as though our best profit opportunities are when the markets go nuts and everything is tanking.  We shine and the rest just lose money.

So how can a global macro trader make money from volatility?  Well the easy answer is to anticipate it.  Of course I can already hear you saying that it is hard.  Yes, it is but there are several good tools to help us gauge when it is coming and when it is likely to be leaving.

Most investors have heard of the VIX which is the implied volatility index for the SP500.  But did you know that there are volatility indexes for currency markets, bond markets, and even commodity markets?  Yes, there are and if you aren’t using them you are missing out on some great global macro trading opportunities.