This is also a trending strategy. The signal for opening a position is a combination of two moving averages of the same period on the VIX.
Another trendy strategy in VIX-related instruments. Here, the presence of a trend in Constant Maturity futures on VIX is analyzed. If the faster moving average is below the slower one, implied volatility is decreasing. In such a situation, we short VXX. Otherwise, we stay out of the market.
In this strategy, we again short VXX. To assess the appropriateness of the short, use Bollinger Bands. They represent the distance in terms of standard deviations from the moving average. It is assumed that the behavior of the instrument within the upper and lower Bollinger Bands is a random deviation from the average. If the price value moves away from the average by a large number of sigmas (standard deviations), an anomaly is observed in the market for that instrument.
Another technical trend-following strategy with volatility ETP.. We use a short trend in VXX, determined by the crossing of simple moving averages.
This momentum strategy is also taken from an article by Double Digits Number. The idea is quite simple – go long on the best-performing volatility ETF from a selection. Choose the ETF with the maximum positive return over 4 months.
Apart from anomalies related to the rolling of futures or risk premium, instruments associated with volatility can be traded using technical strategies. The simplest of these is the use of simple moving averages.