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Q&A  |  MAR 2006

Q&A by Don Bright

Stocks & Commodities V. 24:3 (74): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. VOLATILITY & TREND Does volatility of a particular market have any correlation with its trendiness? Does increased volatility result in more trends or choppy markets? Any insight, tips, thoughts, or comments on the relationship between volatility and trend will be welcome.—rizwanuk One of my concerns is that most people don’t truly understand implied volatility (as reflected in the VIX, for example) vs. historical volatility. When compared to one another, the two actually show the trending direction, if not the magnitude (gammas) of the move. Due to basic math, as markets trend up or down, volatility goes up. The opposite is true when markets stabilize or become choppy, and implied volatility goes down.

by Don Bright

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