Insight Wanted

B

bronks

It's been years since I've traded anything but the ES. Saying that, I've opened a small non-margin acct. to trade some ETF's to possibly augment my ES trades. I've read all 24 pages of this thread/forum (?) and it seems the general consensus is that these are not long term plays. Ok... except long term is very relative upon ones idea of what that is. Especially if a 45min trade seems excruciatingly long.

Example:

My strategy is to hold the position from anywhere from a week to 6 weeks. I don't mind disclosing the fact that I've got a tiny position in SDS. No matter what it does is irrelevant because the results will be minimal. It's more of a test of broker fills, software, toe in the water kinda thing. This is an anticipation of a complete breakdown in the market... if it does.

My question being, what are some of the landmines I might be on the lookout for, if this was a trade with decent size? One I found very early is market orders. I got filled .15 cents outside of the market today when the spread was no more than .02 cents. I'm just not used to that.

What say you guys?
 
hey bronx - what ETFs are you looking to trade? If you are an experienced trader (sounds like you aren't as green as I am) then I would say the two things to worry about are #1 holding overnight and gapping up/down and the open (sometimes 10%+++) and market orders, mainly at the open, but also in ETFs that aren't very liquid.

I personally trade a few names and have no issues at all staying up to see Asia open, waking up at 4am to check London open and check NYSE futures...

I'd be happy to answer any specific questions, if you have any. Other concern is price decay over time with leveraged ETFs as they tend to lose value due to the downside always being grater than the up-side.
 
Ok, bad breath aside, here goes....
Are you crazy??? If you're gonna swing an ETF, I wouldn't recommend an Ultra. Keep it base. News kills ! Have you seen how news moves the mkts? You can have the perfect entry, both by technicals and fundamentals, and still got stomped by some BS news.
If your time frame is weeks, as opposed to minutes.....I'd say do it with options. If you wanna go long something, I'd recommend buying a call. Way less capital at risk, and reward will still be there.
And if your time frame is weeks on SDS,,,,I got no idea why you'd be the least bit concerned about .12 slippage. That thing moves in dollars, not cents.
 
Howzit Winston,

Like I said, I'm planning for more of a longer term perspective on these. I've had a coupla bad trips recently and not so recently with the ES trading through my overnight stops, so I refuse to do them anymore. So I wanna establish more of a position with ETF's. Gaps won't bother me as much because I'm limiting my exposure through sizing and non-margin. In this way I hope to take advantage of some of the 2x and 3x levered ETF's while not taking on a boatload of risk... if that makes sense.

So I guess my question would be, there's gotta be some balance point when decay does start to creep in... if I'm reading this correctly (correct me if I'm wrong)... to the point of affecting or diminishing returns. I'm looking for a timeline so to speak.

ETF's I'm looking at:

DIA SPY XLF XLE
DDM DXD SSO SDS
FAS FAZ UCO SCO IYT
 
Quote from spades434:

Ok, bad breath aside, here goes....
Are you crazy??? If you're gonna swing an ETF, I wouldn't recommend an Ultra. Keep it base. News kills ! Have you seen how news moves the mkts? You can have the perfect entry, both by technicals and fundamentals, and still got stomped by some BS news.
If your time frame is weeks, as opposed to minutes.....I'd say do it with options. If you wanna go long something, I'd recommend buying a call. Way less capital at risk, and reward will still be there.
And if your time frame is weeks on SDS,,,,I got no idea why you'd be the least bit concerned about .12 slippage. That thing moves in dollars, not cents.
More...

Spades,

I don't know enough about options to do what you say which is why I'm exploring ETF's. I'm quite familiar with news/gaps and plan to limit my exposure through smaller positions, and ES offsets during the day. Basically what I'm trying to do is build a directional core position that won't keep me awake at night.

I'm really not concerned about slippage. I just thought it funny to go years with virtually none (ES), then to immediately encounter it on a thick ETF.

:D
 
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