Hello All,
I have developed a system that appears to be working extremely well on the SPY. Being a conservative type I only wish to commit around 20% of my net wealth to my strategy. Using this strategy I am not afraid of using high risk at it is a robust system with a high hit rate.
What I am looking at is using other highly correlated instruments to trade using setups that occur on SPY. The question is which one is best or at least here is how I see it.
Trading stocks that are > 90% correlated would allow me to pick lower priced stocks allowing me to purchase a larger amount of shares. For example TY is trading in the 20's whereas SPY is in 200's.
Leveraged ETF's could be used such as SSO and SDS but I have no experience with these and not to sure how liquid these products are.
Using the ES futures which also has lots of leverage available.
I could also use S&P 500 CFD's however there seem to be a lot of firms offering this with a 5 point spread. They can kiss my A&$.
Has anyone been in a similar situation or have any advice in regards to using alternate product selection? There are many alternates to trading the SPY but I am not sure which one is the best. With regards to liquidity I generally trading in areas where there is plenty of liquidity coming in from the other side, however if I am using illiquid products as account size grows I don't want this to become a problem.
On another note with our arbitrage friends keeping the correlations in place between these products is there anyway that I can use a formulae that would convert the prices of these products directly to the price of the underlying SPY? Basically I would like to identify entries and targets off the SPY and transfer those targets to the derivative I am using.
I really would appreciate any information from traders who have found themselves in a situation similar to this before. Also I will not responding to any requests from traders asking questions pertaining to the strategy I use.
Thanks in advance.
I have developed a system that appears to be working extremely well on the SPY. Being a conservative type I only wish to commit around 20% of my net wealth to my strategy. Using this strategy I am not afraid of using high risk at it is a robust system with a high hit rate.
What I am looking at is using other highly correlated instruments to trade using setups that occur on SPY. The question is which one is best or at least here is how I see it.
Trading stocks that are > 90% correlated would allow me to pick lower priced stocks allowing me to purchase a larger amount of shares. For example TY is trading in the 20's whereas SPY is in 200's.
Leveraged ETF's could be used such as SSO and SDS but I have no experience with these and not to sure how liquid these products are.
Using the ES futures which also has lots of leverage available.
I could also use S&P 500 CFD's however there seem to be a lot of firms offering this with a 5 point spread. They can kiss my A&$.
Has anyone been in a similar situation or have any advice in regards to using alternate product selection? There are many alternates to trading the SPY but I am not sure which one is the best. With regards to liquidity I generally trading in areas where there is plenty of liquidity coming in from the other side, however if I am using illiquid products as account size grows I don't want this to become a problem.
On another note with our arbitrage friends keeping the correlations in place between these products is there anyway that I can use a formulae that would convert the prices of these products directly to the price of the underlying SPY? Basically I would like to identify entries and targets off the SPY and transfer those targets to the derivative I am using.
I really would appreciate any information from traders who have found themselves in a situation similar to this before. Also I will not responding to any requests from traders asking questions pertaining to the strategy I use.
Thanks in advance.
