Volatility Indexes: Gold! GVZ (Part of a series)

In the first part of this series, the VIX was defined and reviewed. To read the introductory article, click HERE. Several other volatility indexes were mentioned. In this part, let's strike GOLD!

There are quite a few gold traders out there. Adding a volatility index that is based on the gold market can be an awesome tool to add to your cache. When you visit CBOE and see the list of volatility indexes available, you will notice a section of Commodity-related ETFs. That is where you will find GVZ, the Gold Volatility Index of CBOE.

For reference added to the GVZ chart are Simple Moving Average lines. The red is set at 200 and is slow. Green is set at 50 and is fast. Yellow/Orange is set at 100 and is medium. It is best when the market is either above or below all three lines.

The following image shows the relationship between the GLD and the GVZ. You can see that when volatility is low, the price is up. As volatility moves above the line, prices drop.
To view larger image, click HERE.

Watch the following short video to better see how implied volatility as shown on GVZ can relate to whichever gold market you are trading.

Using a Volatility Index that applies to the market you are trading can help you whether you are trading Futures, Stocks, Commodities, Stock Indexes or Nadex Binaries. To further your trading education, visit www.apexinvesting.com, a service of Darrell Martin.