Q4 2013 Strategy Reports - Volatility Trading Strategies

It seems the bull market still has some legs as it was a very strong year for stocks and naturally that is also a nice tailwind for the XIV which we trade.  Volatility Trading Strategies finished the year up about 77% in 2013.  Overall we’re very pleased with how the system performed through this year.  Remaining systematic in our approach rather than discretionary helps avoid those times when emotional decisions can derail forward progress.

I study investor psychology a lot and I’m very conscious of my own short comings when it comes to making emotional decisions.   With trading volatility products it’s even more important because of how fast things can change and how large the month to month swings can be.  It’s been a couple of years since the VIX Index crossed 40, but if history has taught us anything it’s that it will happen again before too long.  The rub is, the VIX can only hit 40 when it’s unexpected.  When market turbulence puts traders in a panic the VIX goes vertical.  That’s when we’ll need to remain process oriented and stay the course.  Trading the signals with conviction as they come through good times and bad is they key to long-term success.

Thanks for putting your trust in us and our system throughout the year.  Looking forward to another strong year in 2014 and beyond.

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