rather than pick out individual stocks to trade, it can often be worthwhile to trade the indices themselves, especially in times of high volatility.

for those so inclined, i attach below charts for FTSE and FTSE 250, though one might equally be tempted to trade Dow or S&P, which is significantly broader in its coverage, or even NASDAQ

for ease of reading, i have attached 1 year and 3 month charts in each instance

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For those with a few minutes to spare over the w/e, this is a view from the FT concerning the market volatility:
The last week of August was one of the most volatile we have seen in global equity markets for several years. The fear that had been building hit the markets with a jolt on Monday 24 August. The warning lights had been flashing for several months but developed equity markets, with the complacency of a boiling frog, had appeared unconcerned by the worrying developments in other asset classes.

Clearly, there were fundamental triggers for the market declines but, in our view, the market moves were exacerbated by flow considerations and market technicals. So, what happened?

What caused the US market to lurch lower so violently and then recover? How could a stock like GE, for example, a $250bn company, fall as much as -21% in the first few minutes of trading and then recover to close the day down less than -3%? Apple, the world’s biggest stock, ‘lost’ $79bn worth of value at the market open but had recovered it all within an hour (by the way, that is broadly equivalent to the entire market cap of AstraZeneca).

First, let’s recap on the fundamental triggers.
Commodity prices had been weak for some time, initially on supply developments but more recent moves lower have been demand driven, signalling a deteriorating global growth outlook, especially in China. Fears about the world’s second largest economy in recent months had spilled over into emerging market currencies, their equities and in to the high yield debt market.

At the same time, the Chinese stock market had become completely detached from the reality of its underlying economy. The fall from its peak in June has been spectacular – in less than 10 weeks, the value of mainland China equities broadly halved, wiping out more than the total capitalisation of the UK stock market in the process.

Equities were in the eye of the storm on Monday 24 August after experiencing sharp sell-offs on the previous Friday, when poor China PMI data was followed by weaker than expected US PMI data that afternoon. The weekend press that followed focused on the sell-off and potential implications. “Global stocks suffer rout as fears intensify over Chinese slowdown” was the Financial Times front page on the Saturday.

When Asian markets opened on Monday 24, Chinese equities were hit very hard and closed the day down -8.5%. The falls in China triggered a sell-off in international markets as fear spread across the globe. The moves were extraordinary and have raised a lot of questions about how modern markets function in such volatile conditions. The FTSE was down -6.8% at its low, which coincided with the US market opening on the Monday, but ended the week in positive territory. All European markets experienced similar sell-offs.

Watching the screens at first hand, reading the flood of news on the wires and in talking to fellow traders in the industry, there are suggestions that other forces, besides fundamentals, are at work. Heavy selling pressure in equity futures ahead of the US open certainly played a role in these moves but another significant reason for the market instability and volatility could be trading activity in exchange traded funds (ETFs).

For instance, in the first few minutes of trading, the $5.8bn Vanguard Health Care ETF fell -32% but the value of the underlying holdings fell only -6%. The trading of the PowerShares S&P 500 Low Volatility Portfolio ETF was also somewhat ironic. According to its description, “the fund seeks results that correspond generally to the price and yield of the S&P 500 Low Volatility Index.” In the first 15 minutes of trading, it fell over -45% but within an hour it was down only -2.6%.

Ironically, ETFs were, in part, originally designed to satisfy the demand for an intraday trading option from private investors that wanted to trade more frequently than a daily-pricing fund could allow. Clearly they have an important role to play for some investors but it appears their success has brought some unwanted side-effects.

For now, ETFs are a much more powerful force in the US market than they are in the UK. However, their emergence may suggest that we could face greater volatility going forward. More reasons to think long-term, therefore, and to focus on fundamentals, not flow.

Interesting reading Harry and can only mean good news for the likes of us who dabble around the edges of the indicies. Volatility is always a Brucie Bonus for us! :)

DOW
a tricky call now, with cash up about 300 points since the close for the long w/e in USA

i was a bit o'exposed on Dow (long) and with hindsight was too cautious in banking some of those profits, but better in my pocket than potentially frittering it all away again

i have another small position on which i have placed a limit at 16,460 and another which is too far out to worry about for now, though very happy to see the loss it was carrying diminish very substantially :-)

all fun and games today
just managed to squeeze out a little 25 point (long) profit, but only after there had been a scare south

made another small turn, but far too quickly - he said with 20/20 hindsight!
still, i have a couple of other dow longs running, though they're currently out of the money, but a lot less so than they were 20 minutes ago :-)

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would very much like to see ftse close back above 6200 but it still has about 25 points to go

after a bit of a gloomy friday i am very pleasantly surprised to see FTSE having another dart at 6200
whether it can breach and hold is another matter

FTSE looking interesting currently 6084

bought a bit prematurely at 6100, but i hope won't prove to have been too rash

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Heading towards 6000 again .

or even a tad lower
however, my gut feeling - not necessarily correct - is that thursday will see no change in interest rates in usa, and thus are big surge, sustained or not
and if there is a very small rise, is that not effectively already discounted?

Last time it went under 6000 we had a 350 point bounce .

On it's way back got down as low as 6017 all depends on the DOW as well this afternoon i suppose .

FTSE has really struggled today but has at last limped back north of 6100
it would be nice to have a good blue day on both sides of the pond

too ambitious for today i'm sure, but ideally DOW needs to climb above 16,500 and, in due course, FTSE above 6,200

16,500 has proved pretty stubborn of late but with this early surge, there's just a chance that it will follow through and bust out

woohoo!
never expected a GOOD day like today ...... glad i already had a couple of longs already in place, even though they've been a bit scary of late

cashed in half Dow for +100 but have left all FTSE running as i'm pretty confident that that will whizz at least first thing tomorrow

I couldn't be by my screen after 1 pm so couldn't play , annoying as i was going long FTSE ,should have gone long earlier at 6050. Got a couple of stocks running long though which is more my thing .