What Is the Market Volatility Index, and How Does It Impact Your Investments?

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The Market Volatility Index (ticker symbol: VIX) is a tool that the Chicago Board Options Exchange (CBOE) created in order to give traders a reliable estimation of upcoming volatility in the overall stock market. To put things simply, the VIX is kind of like a forecast for the market, predicting either clear sailing or choppy waters. But it does get a bit more complicated than that, and it’s important to understand the role this tool can play in the ways you manage your investments. Let's delve into what the VIX does, how it works and how you can use it to make better-informed trading decisions.