VIX Reference Indicator

2023년 3월 4일

Hello everyone,

Releasing my VIX reference indicator.

What is it:
This indicator displays the current trading behaviour of the VIX.
It displays it in Z-Score Format along with identifying previous areas of reversal and displaying when the RSI is overbought or oversold on the VIX.

Who is it good for:
It is good for both day and swing traders who use the VIX in their trading plans.
It permits traders to look at different aspects of the VIX (RSI, Z-Score and Reversal areas) simultaneously while they are watching their current traded stock.

How does it work:

The indicator works by converting the VIX into a Z-Score (similar to bollinger bands).
It then plots the VIX out in Z-Score format in the indicator.
Because it is plotting the VIX based on Z-Score, it looks back to previous areas where the Z-Score led to a reversal (i.e. what was the lowest or highest Z-Score the VIX achieved in the lookback period before reversing).
It also looks at the RSI of the VIX. If the VIX RSI crosses at or above 70 (overbought), it will change the colour of the line to green. This means the VIX is overbought and will likely sell and thus, the thesis is, as the VIX sells, the stock you are trading should come up.

Below is a picture of the different aspects of the indicator:






Customaization:
Per usual, you can customize the colours and bands to your liking.
You are also able to specify the RSI length you want to look at as well as the Z-Score Reversal length and the timeframe length of the chart you are looking at.

The default settings are 75 Average Length lookback for the Z-Score Reversal and the Chart and 14 period RSI.

TIPS:

The most persuasive setups are when you get all 3 of the following:
1. A signal that supports the thesis (buy or sell) along with:
2. An RSI signal that supports the z-score signal along with:
3. The VIX trading at an extreme end of its Z-Score range

Example:


In the example above you will see the following conditions are met:

1. Z-Score historical reversal point identified (short)
2. VIX RSI is oversold (short)
3. VIX is at the bottom of its Z-Score range (short)



As always, I have done a quick tutorial video for your reference which you can see below:

Leave your questions/comments/requests below or on the video as I am always happy to get feedback on improvements and functionality.

Thank you everyone checking it out and safe trades!