Investor Warren Buffet famously advised, “Be greedy when people are fearful, and fearful when people are greedy.” Many investors say the safest and most potentially profitable assets to buy are the ones that nobody likes. This is a mistake. Classic cars are negatively correlated to downward moves in the major indexes, as evidenced during the crisis of 2008 to 2011, so performance is driven by a contrarian view. Buy the asset everyone loves, and love the assets you own.
Volatility trading is the term used to describe trading the velocity of movement in price of an underlying instrument rather than the direction of price. For example, you could trade the value of an equity index, but volatility trading typically means trading the expected velocity of movement.
The world of technical analysis is complex, but with a working knowledge can be applied to virtually any market. Here we introduce you to 10 important rules of technical trading first described by technical trading legend John J. Murphy.