Q1 2013 Strategy Report - Volatility Trading Strategies

Updated: Aug 2

Regardless of the many differences between all the tradable funds within the financial industry, they all have one thing in common.  They all had a first day where they began live trading.  That of course doesn’t imply the managers experience began on that day because it takes years of prior experience, countless hours crunching data and system building, and usually a fair amount of bumps and bruises along the way in our private trading accounts to finally reach the point where a fund is ready to be launched to the public.

Here at Volatility Trading Strategies that day came one year and three months ago in January 2012, which means it's now long enough to start drawing some conclusions on performance, and we’re off to a great start. As I've written about in the past, my trading journey began in 2005 right after I retired from professional golf, and believe me, I've made plenty of mistakes in the past 8 years.

But I'm at the point now where my VTS strategies are a pretty streamlined machine, and in the coming years / decades I'll demonstrate how effective they are at reducing drawdowns through difficult market periods. Big profit is nice, and I'll do my best, but it's really the consistency aspect that I'm most focused on. Anybody can make money when the markets cooperate. I plan on proving my worth to investors by helping them navigate the ugly market periods.

Trading volatility as an asset class is a fairly new concept, but there are some individuals out there I know of and respect that have been trading live for as long or longer than me. I invite people to check out the good work of a couple of my direct competitors such as Vix and More and Market Sci.  Like many fund categories in this business though, being first to launch doesn’t necessarily mean the best as I will strive to prove as the years go by.  There are some things those traders are doing that I agree with as they are uniform principles that govern all volatility trading. However, there’s also a healthy amount of new concepts I’m bringing to the table which my strategies are based on. In due time I think it will be obvious why my strategies are unique and revolutionary. All I need to prove that is some market crashes, and you'll quickly see why I trade the way I do.

One of the big differences that I focus on and I’ve talked about a lot is, it's not about when to take a trade, it’s about when NOT to.  Roughly 50% of the signals that all of our strategies are looking at are strong signals that clearly point to a favorable direction.  It’s really what to do with the other 50% of the more ambiguous signals that in the long run will separate the winners from the losers.  My fund will likely spend about 50% of the time in cash which will help avoid the major market drawdowns we are sure to experience in the coming years as we move further into this FED induced recovery.

Now that the volatility strategies have a significant history, these quarterly reports will be a recurring addition here at Volatility Trading Strategies. We have other strategies too (Balanced and Condor) but the interest really is in the volatility ETPs so I'll focus mostly on that in my writing. I invite everybody to check back often for new content.

Thanks for the support over the past several years, and please join me in this new frontier of trading volatility as an asset class.

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* All information, analysis, and articles on this site are provided for informational purposes only. Nothing herein should be interested as personalized investment advice as I make no recommendations to buy, sell, or hold any securities or positions. I'm making this website available "as is" with no warranty or guarantees of it's accuracy, completeness, or current's. If you rely on this website or any of the information contained, you do so entirely at your own risk. I do not hold myself out as a financial advisor and nothing herein is a solicitation for any fund or securities mentioned. Although I may answer general questions about the information herein, I'm not licensed or registered under security laws to address your personal investment situation. Past performance is not indicative of future results. Any and all financial decisions are the sole responsibility of you the individual.