The Vix, also known as the fear index, allows traders to bet on the expected volatility of the stock market in the next 30 days. Mike van Dulken, the head of research at Accendo Markets, says: “It’s great if you’re long stocks or commodities. It’s a great hedge.”
Trading trees, or lumber as it’s known in the trading world, can be an interesting one. There’s not much data available to reference, but it’s a fun way to gain access to market that isn’t easy to tap. Will Hedden of IG Markets suggests you go long when the global economy is looking good.
3 Heating Oil
Jamieson Blake of Capital Spreads says: “Trading heating oil can be used as a great hedge against diesel and jet fuel. The downside of trading this market is the heightened risk of increased volatility – swings of up to 1,000 points intraday are not unheard of.”
4 UK Housing Index
The liquidity in the UK housing market is low unless the end-of-month data has just been released. Van Dulken says: “There are places to look for hints on the direction: interest rates, consumer confidence and data from the Royal Chartered Institute of Surveyors, for instance.”
5 UK Banks FTSE 350
The UK Banks FTSE 350 is a fun sector punt. Hedden says: “It’s great for getting a diverse spread across all the banks, but beware: the big players are overweight in this one. Positive results from HSBC could cause an uptick on a generally falling market.”