ETFs vs futures

[Swish]

I've traded QQQ strategies up till now and have never traded futures. A few weeks ago I saw someone make reference to S&P and Nas futures being better vehicles to trade than the ETFs due to a bit less volatility - perhaps better stated as a bit more trending intraday for futures when compared to ETFs.

I would not have expected this due to the direct relationship between ETFs and Futs, but the poster seemed pretty confident.

Thus, the following 2 questions:

1. Has the above been people's experience trading ETFs vs futs.

2. Apart from leverage and PDT rule differences, are there any other advantages of trading futs (full or eminis) vs. etfs??

Thanks,

Swish

 

[garbo]

This is a commonly asked question here on ET.

I'm sure you will get some good answers, but you might also try using the Search function with keywords like "ETF" and "SPY" (or "QQQ"). That should pull up a wealth of responses by people who might not be found here so frequently any more.

I hope this helps. I've spent a good amount of time digging through old threads myself and have learned a lot that way.

 

[hypostomus]

...I traded QQQ semi-successfully intraday for about a year. After they effectively shut Island down, the fills got shitty and slow and the spreads got outrageous, and several kind souls on SI wised me up to NQ (I may have the chronology confused here, getting feeble-minded).

I have been trading that for nearly two years, just a few months ago learned how to be profitable. If you have the right broker, IMO there is no contest between QQQ and NQ. IB RT commish is $4.80, fills occur in less than a second, market order slippage is near theoretical (I actually get somewhat better, why I know not). As intraday margin is $1125, with good stop practices I believe you can safely trade 1 NQ with a $3K account. On another thread recently there were violent disagreements about this.

Remember that 1 NQ is equivalent to 800 QQQ's, so with a leverage currently around 20 X 1325 / 1125 you have to be nimble. Most of the folks I have corresponded with pick their times of day carefully and don't hold overnight. The bad news is that this market is manipulated. The good news is that this market is manipulated. Figure out how the smart money trades it and you won't be dumb money. Plus, as someone pointed out recently, if you accidentally make money, because it's a financial derivative it has preferential tax treatment. This bad advice will no doubt cause someone smarter than me to intervene.

 

[Lovelitera]

An other benefit using futures is that one can use T Bills to margin a futures position. These days T Bills don't pay much but over time it adds up.

One example of benefiting from extra leverage afforded using futures is in delta neutral trading, saving big time on margin.
Looking for an up move one would sell stock and buy (say 2)calls on the same stock having the same total deltas as the stock. As the market rocks either the stock or the options may be profitable and adjustments can be made.

When it comes to volatility during the day it can be better or worse than the underlying vehicle depending on the spread between the two because the arbs get busy when the stock, option and the futures get out of line.