The Volatility Course, Workbook
Step-by-Step Exercises to Help You Master The Volatility Course
Chapter One
Crisis and Chaos in
Financial Markets
Summary
Most investors understand that, historically, stock prices rise. This has been the case
ever since securities started trading after the signing of the Buttonwood Agreement
in 1792. It is undeniable that, over time, stocks appreciate. At the same time, however,
there are times when stocks do not perform well. So-called bear markets surface
periodically in which stock prices fall and shareholders lose money. In
addition, sometimes the stock market's decline can be violent, such as the crash of
1987-an extreme example. That sharp market decline stands out in the history
books as a period of extreme volatility and lost wealth for stock market investors.
The volatility trader has a different perspective on the market than the traditional
stock market investor. The volatility trader understands that times of falling stock
prices and rising volatility are inevitable. However, periods of high volatility offer
an equal number of trading opportunities as when stock prices are rising. Therefore,
volatility is not a negative. There are wa ... read full excerpt from The Volatility Course ebook
