QQQ trade strategy
- Thread starter exce26
- Start date
I am not sure I want to go in too many details. But here are some information and pointers.
read also this small thread :
http://www.elitetrader.com/vb/showthread.php?threadid=1204&pagenumber=1
QQQ does not trade like a normal stock although it is one.
You obviously know it is an index tracker, but let's consider the implication :
- supply and demand is not the main fuel for the moves.
the underlying index is.
so any strategy for QQQ must be based on the Nasdaq 100 index itself.
- therefore you track NDX [Naz100] with technical analysis AND QQQ for the price. this is very different than other types of stock trading. sure, it is index trading I know.
My point is you want tools which can work well with multiple related securities.
- supply and demand have a very local influence on QQQ's price and spread. When the very short term sentiment is bullish on the NDX, QQQ will have a positive divergence to its 'fair price'.
your tactic must be careful not to pay too much for QQQ. players on Island will quickly move the price higher when they can. But this is very local.
- Don't daytrade QQQ in AMEX !
This should be obvious. But IB users when using 'best execution' will always trade with AMEX.. and LOOSE !
IB is fine, just use ISLAND for QQQ, it's the best way by far.
- I have 9 setups and most have a long and short version.
What seems to work well with QQQ and index trading is pattern trading [setups]. I find oscillators, MACD and other simple methods useless. Maybe it's just me. Index trading is done best based on price [volume is not really relevant with QQQ since it is indirect and supply and demand don't decide the price, the index does] but that's my opinion.
- Stops are the difficult part imo
an index like NDX, that's 100 stocks so a 'logical' stop is somewhat fuzzier than with a single stock. I use a small room to let the logical stop breath a bit.
- You need LOW commissions
QQQ does not move enough to be interesting without very low commissions. IB is ideal for that.
- Use the Nasdaq futures !
If you don't watch the futures very closely when daytrading QQQ you will make your life much more difficult. The NDX is not updated enough, so your main direction indicator is the naz emini contract.
And eventually, consider direct trading of the Naz futures when you have enough money. this instrument is easier than trading QQQ in the sense it is a direct market [no underlying] it is supply/demand, it goes fast, and leverage is rewarding. That's the trouble too, if you are undercapitalized you might die quickly there. You can take longer moves in QQQ than in the futures though. That's how people trade them at least.
With the proper setups and testing, QQQ is really fun to daytrade, day in day out. Always the same patterns coming back.
vpiNeo
read also this small thread :
http://www.elitetrader.com/vb/showthread.php?threadid=1204&pagenumber=1
QQQ does not trade like a normal stock although it is one.
You obviously know it is an index tracker, but let's consider the implication :
- supply and demand is not the main fuel for the moves.
the underlying index is.
so any strategy for QQQ must be based on the Nasdaq 100 index itself.
- therefore you track NDX [Naz100] with technical analysis AND QQQ for the price. this is very different than other types of stock trading. sure, it is index trading I know.
My point is you want tools which can work well with multiple related securities.
- supply and demand have a very local influence on QQQ's price and spread. When the very short term sentiment is bullish on the NDX, QQQ will have a positive divergence to its 'fair price'.
your tactic must be careful not to pay too much for QQQ. players on Island will quickly move the price higher when they can. But this is very local.
- Don't daytrade QQQ in AMEX !
This should be obvious. But IB users when using 'best execution' will always trade with AMEX.. and LOOSE !
IB is fine, just use ISLAND for QQQ, it's the best way by far.
- I have 9 setups and most have a long and short version.
What seems to work well with QQQ and index trading is pattern trading [setups]. I find oscillators, MACD and other simple methods useless. Maybe it's just me. Index trading is done best based on price [volume is not really relevant with QQQ since it is indirect and supply and demand don't decide the price, the index does] but that's my opinion.
- Stops are the difficult part imo
an index like NDX, that's 100 stocks so a 'logical' stop is somewhat fuzzier than with a single stock. I use a small room to let the logical stop breath a bit.
- You need LOW commissions
QQQ does not move enough to be interesting without very low commissions. IB is ideal for that.
- Use the Nasdaq futures !
If you don't watch the futures very closely when daytrading QQQ you will make your life much more difficult. The NDX is not updated enough, so your main direction indicator is the naz emini contract.
And eventually, consider direct trading of the Naz futures when you have enough money. this instrument is easier than trading QQQ in the sense it is a direct market [no underlying] it is supply/demand, it goes fast, and leverage is rewarding. That's the trouble too, if you are undercapitalized you might die quickly there. You can take longer moves in QQQ than in the futures though. That's how people trade them at least.
With the proper setups and testing, QQQ is really fun to daytrade, day in day out. Always the same patterns coming back.
vpiNeo
Buy low sell high 
.
You might want to check this link: http://www.stockjunkie.com/newsletr.htm
So far he has been right on the money calling the bottom in April and the channel in May. I am looking forward to his June commentary.
I have done well swing trading the QQQ, but I don't daytrade it. Right now I am short at 51.35.
.You might want to check this link: http://www.stockjunkie.com/newsletr.htm
So far he has been right on the money calling the bottom in April and the channel in May. I am looking forward to his June commentary.
I have done well swing trading the QQQ, but I don't daytrade it. Right now I am short at 51.35.
Originally posted by Sniper_Trader1
Buy low sell high
I initally thought you were not very nice to just send this comment which means nothing for people who want to learn.
But then you post a very nice link.
I like Tony Oz's work. His book gave me the practical basics to start trading. And I made money thanks to his explanations. It is not the best book of course, but imo it is one of the few which really tells you how trading is done when you want to start and covering swing and day trading, which is also not that common.
thanks for the link.
vpiNeo
I know Tony trades the QQQ a lot. When I took his seminar, he said that the Island Boys (those who use ISLD for program trading) give a faster signal on the direction of the Nasdaq than the futures do. He showed us screen captures, and at times, the Island Boys were 7-15 seconds faster than the actual futures contract.
I have to admit that I didn't quite understand the entrire arbitrage logic Tony was explaining, maybe becuase I was still a rookie, so I don't want to misquote him on this subject.
As to the "buy low sell high comment," I was just being silly. I am sorry if my late-night sense of humor took away from my intentions to post the link.
I have to admit that I didn't quite understand the entrire arbitrage logic Tony was explaining, maybe becuase I was still a rookie, so I don't want to misquote him on this subject.
As to the "buy low sell high comment," I was just being silly. I am sorry if my late-night sense of humor took away from my intentions to post the link.
Hi Sniper,
Cool
I am very curious about Tony's explanation if you can find it back [he may also respond here !].
My experience is very different, no doubt QQQ moves after the futures unless it is my feed which is slow !
However, I also noticed Island moving very quickly, sometimes anticipating a bit the futures but always to retrace back before the real move [which follows the futures then].
So maybe we are saying the same thing [well not regarding the 7-10 seconds delay]. Or maybe things changed since Tony was talking about it.
Please, others, do you have same or different experience. If I am not right, I DO want to know
On the other hand, it works for me that way, I get the profits.
vpiNeo
Cool
I am very curious about Tony's explanation if you can find it back [he may also respond here !].
My experience is very different, no doubt QQQ moves after the futures unless it is my feed which is slow !
However, I also noticed Island moving very quickly, sometimes anticipating a bit the futures but always to retrace back before the real move [which follows the futures then].
So maybe we are saying the same thing [well not regarding the 7-10 seconds delay]. Or maybe things changed since Tony was talking about it.
Please, others, do you have same or different experience. If I am not right, I DO want to know
On the other hand, it works for me that way, I get the profits.
vpiNeo
If I remember it correctly, Tony explained to us that since the futures are traded on the floor, it takes a few seconds to type in a trade once it takes place. This allows electronic arbitrage (or front running) using ISLD and QQQ. What you need to do is create a level II window with only ASE and ISLD. Look to see when ISLD starts to cross ASE (bid higher than the offer or offer lower than the bid). Since the minis are electronic, they might be hitting them at the same time the hit the QQQ and then the floor print comes up and they pocket some money.
According to Tony, it is evident that this program trading arbitrage exists, because of the volume increase both in Nasdaq futures and QQQ shares traded on ISLD.
Tony uses his special QQQ Level II window to get a faster signal than the futures when he manages open Nasdaq positions.
Now please keep in mind that this is from the notes I took in Tony's seminar. I could be completely wrong, but this is how I wrote it.
Since you mentioned his book, I'd say that I got the nick, Sniper_Trader1, from his book, "Stock Market Trader"
According to Tony, it is evident that this program trading arbitrage exists, because of the volume increase both in Nasdaq futures and QQQ shares traded on ISLD.
Tony uses his special QQQ Level II window to get a faster signal than the futures when he manages open Nasdaq positions.
Now please keep in mind that this is from the notes I took in Tony's seminar. I could be completely wrong, but this is how I wrote it.
Since you mentioned his book, I'd say that I got the nick, Sniper_Trader1, from his book, "Stock Market Trader"
OK ! I understand now.
It is the arbitrage between the old pit and electronic sessions.
And there are many other arbitrage ways. But now I get your meaning.
I was talking only about the electronic session [minis] and QQQ on Island. I think QQQ tracks the futures and QQQ's momentum is slowed by the different markets where it is traded.
And regarding the entry, on the initial reaction you always pay too much to get in or pay too less to get out on Island, waiting a few seconds gets you a better spread.
Anyway, Island is the best for the execution speed imo for QQQ, no rush, that's all and prices get better quickly.
Of course, I mean for daytrading only. For swing trading, the few ticks more are not important.
vpiNeo
It is the arbitrage between the old pit and electronic sessions.
And there are many other arbitrage ways. But now I get your meaning.
I was talking only about the electronic session [minis] and QQQ on Island. I think QQQ tracks the futures and QQQ's momentum is slowed by the different markets where it is traded.
And regarding the entry, on the initial reaction you always pay too much to get in or pay too less to get out on Island, waiting a few seconds gets you a better spread.
Anyway, Island is the best for the execution speed imo for QQQ, no rush, that's all and prices get better quickly.
Of course, I mean for daytrading only. For swing trading, the few ticks more are not important.
vpiNeo
"For swing trading, the few ticks more are not important"
http://www.elitetrader.com/vb/showthread.php?threadid=1374
Here is guy that swing trades 10K lots and is worried about a tenths of a cent. i feel the same as you do, but I don't swing trade 10K shares either
. It just goes to show us all how differnet we all are.
http://www.elitetrader.com/vb/showthread.php?threadid=1374
Here is guy that swing trades 10K lots and is worried about a tenths of a cent. i feel the same as you do, but I don't swing trade 10K shares either
. It just goes to show us all how differnet we all are.A professional trading firm such as BXXXXX trading inc. has a real time live broadcasting future quote system in their trading offices. The live broadcasting future quote is 2sec faster than electronic real time quote system. Do you think those professional traders have significant advantage of trading QQQ? Have anyone ever used live broadcasting future quote system trading QQQ?