2. The VIX. This is a volatile measure but the level of the index as you start the trading day can give you a rough guide of how much volatility to expect on an intraday basis. As a general guide, I think of anything below 18 as low volatility; between 18- low 20s is mild volatility; mid-20s or higher is high volatility. But I also think these gradations change over time.

The last part is interesting because things feel far more volatile than 16 right now.
I think things will become more clear when the SKEW becomes more common.

I'm not totally sure what to make of it so far though other than since summer 2010 we have in general had a decreasing VIX but increasing SKEW.

Interesting, thanks. I haven't typically followed the SKEW but will look into it.

I don't think that rule of thumb you mention is a terrible idea with the VIX this low. On the other hand I try to not think that way as that would also be a great way to miss a nice move.

I've never investigated it but I would imagine the higher the VIX, the better chance for consecutive days with large moves. Quantifying high/low VIX and large/small moves becomes an issue though to try to test that.

When's the best time to go fishing?

When the fish are biting.

If they aren't biting ... changing baits and using a different boat won't help.

Whether or not the fish were biting today ... has no bearing on whether they will bite tomorrow.

It never occurred to me to ask what mood the fish were in.

Thanks for your input; I always enjoy reading your witty posts.

I realize that the philosophy of what I'm doing in this thread won't appeal to all traders, and that's fine as we all need to do what works for us. There are many ways to skin a cat (to add another animal metaphor to the mix).

Fishing is actually a really good analogy for what I'm proposing if you look at it in a slightly different way. Maybe you normally fish in one part of the lake. Then you run into a dry spell and notice that the fish aren't biting as much as they used to. So you shift to another part of the lake, maybe find better luck there. You might even start to find patterns: on hot days fish stay in the deep water, at dusk they move to the coves, or whatever.

One approach is to fish the same spot all the time. Maybe there really isn't a deeper pattern governing where the fish are, or there's a pattern but it's not worth looking for as it's simpler to just stay consistent. Another approach is to move to the spot where you think the fish are most likely to be at the time.

Each approach might work fine and each approach has its own risks. I think it boils down to a question of what you have most confidence in: the ability of the system to generate returns if traded consistently, or your own ability to read the signs and adapt to what the market is giving you at the moment.