Trading the QQQQ SPY DIA

[neustaju 10]

It is a general strategy to trade an individual stock with the direction of the major indexes. As a beginning trader I assumed it was my job to analyze the futures markets then trade equities in the direction of the major intraday swings. Too often I have correctly traded with the intraday swings of the Dow/S&P only to find my stock move very little or in the opposite direction:crap:. I began to ask myself "Is this why some traders prefer futures over equities"? Doesnt it just make more sense to day-trade futures OR Index based ETF's such as the QQQQ rather than stocks?

[OAC 10]

It all depend on your style of trading. some stocktraders only concentrate

on 1 or 2 stocks and become an expert at it. they become very familiar with the way the stocks move and direction of the futures is just an added confirmation. The other school is to scan a large universe of stocks for

specific patterns and setups. Again they only use direction of the futures to

help in their entry. If you are trying to scalp stocks for tinnies by watching Level II quotes, people used to do that in the 90s, but I think those days are over.

[brownsfan019 17]

neu - it really comes down to how you trade. If trading stocks with the general trend is not working but trading the actual index is... well.... just trade the index then. I know that seems obvious, but sometimes we want to make things harder than they really are. We've all been there, trust me.

 

As for trading the index, it's just a matter of deciding whether the ETF, Options or Futures work best for you. I would suggest narrowing in on one vehicle in the beginning.

[feb2865 10]

  neustaju said:

It is a general strategy to trade an individual stock with the direction of the major indexes. As a beginning trader I assumed it was my job to analyze the futures markets then trade equities in the direction of the major intraday swings. Too often I have correctly traded with the intraday swings of the Dow/S&P only to find my stock move very little or in the opposite direction:crap:. I began to ask myself "Is this why some traders prefer futures over equities"? Doesnt it just make more sense to day-trade futures OR Index based ETF's such as the QQQQ rather than stocks?

 

 

You must know what's the leading index first. Sometimes is the dow, sometimes is NQ. I prefer when NQ leads the pack to trade QQQQ, but you can get good trades out of the Dow against the cubes. If you're trading a sigle stock out of the futures, is a recipe for disaster on the long run IMHO.

 

QQQQ has plenty of liquidity intraday and it's a lot cheaper than Spyder's.

 

Cheers

[dalby 10]

index futures (Specifically the dow and the s&P) are PURE supply/demand proxies.

 

stocks, to lesser and greater extent - are not

 

the difference is that when institutions want to BUY (in general) they use futures, to a large extent. and when they want to see (in general) ditto...

 

this is especially true in times of chaos, euphoria, and panic

 

an individual stock, especially a thinner issue means you are dealing with market maker games. not an issue with the dow. the dow is a group of 30 very big stock. no individual player (or two) is gonna have much of a significant impact on it, except in rare and short bursts. so, that's a +, at least for me. for those that are very good at playing L2 games, etc. they might prefer certain stocks

 

PERSONALLY, i prefer to trade index futures (intraday)... that's how i make my living.

 

stocks i prefer to swingtrade, and buy for wealth building and dividends, but that's me.

 

another nifty thing about futures (supply/demand proxy) is that internals can really really help you out, if you know how to use them - watching related sectors, bonds, adv/decl line etc.

 

not so much with stocks

[neustaju 10]

I understand that it really depends on individual style. From a purely technical chart patterns point of view though, the QQQQ provides safety from the negative effects sudden News Events can bring by weighting this movement against the other companies it is composed of. My previous quote I was referring to a "Top Down" approach, trading with the Dow/S&P intraday fluctions. Essentially, if my goal is to capitalize from the major index movements (while avoiding the increased risk of trading futures) then it makes the most sense to stick with index based ETF's.

[feb2865 10]

Index futures are pure supply and demand proxies

 

That's completely true and it's one of the reasons some traders doesn't like index futures. It makes them playing on a jumpy zero-sum game. On stocks/EFT's etc. you migth be trading against institution/position traders/investors who doesn't care too much about couple of cents here and there. That makes the whole scene smoother. I trade both futures and EFT's (QQQQ) No personal preference here but as I stated before, some traders do.

[dalby 10]

im not sure what you mean by "increased risk" in re: futures.

 

the only increased risk is increased leverage.

 

if you want to trade less than (for example) a 65k (approximately) notional value in the dow, then using DIA's or even DIA single stock futures is the way to go.

 

100 shares of DIA has 1/5 the notional value of 1 YM contract.

 

but that is the only "increased risk"

 

trading 500 shares of DIA has the EXACT same risk as trading 1 YM.

 

the risk comes (to most traders) from the fact that you can use MUCH MUCH more leverage with futures than stocks (and ETF's trade like stocks).

 

if you have a 50k account, you can trade (assuming 4:1 intraday margin) 200k notional value with your 50k account using ETF's

 

if you have a 50k ira, you can trade 50 k notional value using ETF's

 

but using futures you can trade (depending on your broker) approximately 1.1 million dollars of notional value.

 

so, you can get over 5 (at least) times the leverage.

 

THAT is the danger

 

if you are conservative with leverage, there is absolutely no danger in risk

 

and as far as overnight holds, there is LESS risk since the futures trade (almost ) 24 hrs, and you can set stops for the overnight session

[strtedat22 10]

hello all,

 

what type of strategy can be used for QQQQ. my setups are similiar to soultrader but for individual stocks. Pivot Points, tape, support/resistance level of previous day. will this work for QQQQ?

 

Thanks

[wanr 10]

Hi, I'm getting interested in the QQQ and added as a new instrument in Ninja Trader.

 

I'm not sure I did it right. What is the Tick value for the QQQ? The minimum move is 0.01 point, the minimum amounts seems to be 100 shares and QQQ is directly quoted in USD. Does it mean that if you buy 100 shares and the QQQ move by 0.01 point the P&L is 1 USD?

 

It seems very low but would be great for me as I'm looking for some low risks instruments to play with, with the goal to contimue learning by switching from paper trading to real trading at low risks (ideally limit my loss to 10-20 USD per day is reasonnable for learning with real money).

 

Do you know other instruments that would have low risks (in terms of average possible loss per day in money) and would be suitable to trade for real while learning?

[Tams 20]

  wanr said:

Hi, I'm getting interested in the QQQ and added as a new instrument in Ninja Trader.

 

I'm not sure I did it right. What is the Tick value for the QQQ? The minimum move is 0.01 point, the minimum amounts seems to be 100 shares and QQQ is directly quoted in USD. Does it mean that if you buy 100 shares and the QQQ move by 0.01 point the P&L is 1 USD?

 

It seems very low but would be great for me as I'm looking for some low risks instruments to play with, with the goal to contimue learning by switching from paper trading to real trading at low risks (ideally limit my loss to 10-20 USD per day is reasonnable for learning with real money).

 

Do you know other instruments that would have low risks (in terms of average possible loss per day in money) and would be suitable to trade for real while learning?

 

where is QQQ traded?

[wanr 10]

In the Nasdaq.

 

QQQ POWERSHARES QQQ TRUST NASDAQ STOCK

 

QQQ

The ticker symbol and Wall Street name for the exchange-traded fund based on the Nasdaq 100 Index. This fund, traded on the American Stock Exchange and the New York Stock Exchange, serves as a proxy for large-cap Nasdaq stocks, including Microsoft, Oracle, Cisco, and Intel. Also called cubes.

[wanr 10]

QQQ

 

Definition

The Nasdaq 100 Index Tracking Stock. The QQQ is an Exchange Traded Fund which allows investors to essentially invest in all of the stocks that make up the Nasdaq 100 in a single security.

[JEHs 10]

  wanr said:

Hi, I'm getting interested in the QQQ and added as a new instrument in Ninja Trader.

 

I'm not sure I did it right. What is the Tick value for the QQQ? The minimum move is 0.01 point, the minimum amounts seems to be 100 shares and QQQ is directly quoted in USD. Does it mean that if you buy 100 shares and the QQQ move by 0.01 point the P&L is 1 USD?

 

It seems very low but would be great for me as I'm looking for some low risks instruments to play with, with the goal to contimue learning by switching from paper trading to real trading at low risks (ideally limit my loss to 10-20 USD per day is reasonnable for learning with real money).

 

Do you know other instruments that would have low risks (in terms of average possible loss per day in money) and would be suitable to trade for real while learning?

 

The answer is yes. One tick is one penny per share as it is on any stock or ETF. This is not like futures where every one has a little different tick value. So if 100 share moves 1 penny or one tick, it equates to one dollar.