Wanted to know if this was possible: keeping long and short accounts for holding the QQQQs overnight to take advantage of pre-market movement. I've read a few books that claim this can work, and the Qs would seem to be the ideal vehicle. Can't find much info concerning the Qs (high liquidity, but no one confesses to trading them), so I'm wondering if this strategy has drawbacks (such as horrible fill histories, wicked commissions, etc.). Could (or should) something like this be better handled through automated trading? Any suggestions would be greatly appreciated.
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Swing-hedging the QQQQs?
- Thread starter tminuspi
- Start date
Both Long AND short?Quote from tminuspi:
Wanted to know if this was possible: keeping long and short accounts for holding the QQQQs overnight to take advantage of pre-market movement. I've read a few books that claim this can work, and the Qs would seem to be the ideal vehicle. Can't find much info concerning the Qs (high liquidity, but no one confesses to trading them), so I'm wondering if this strategy has drawbacks (such as horrible fill histories, wicked commissions, etc.). Could (or should) something like this be better handled through automated trading? Any suggestions would be greatly appreciated.
I don't get it, your gains long would offset your losses short or viceversa, so you'll be paying commissions for nothing.
You can be long and short on call/put options or futures, this strategy is called a straddle, and makes money is there's a big movement of the stock, in any direction.
I should have explained a bit more in the first post. Had a guy show me what he was doing with this idea, and it seemed to make sense. He'd start off with, say, 5000 shares of the QQQQ in two (2) different brokerage accounts. He'd hop in on one direction (based on the day's market momentum) with both accounts, and look for enough "wiggle room" to sell off one account, then go the opposite direction if patterns gel (either three consecutive days or a total of 170 points on the Dow) at the market close. If he guessed wrong on the opposite direction, he'd take the loss and jump back in the "right" way (while still being able to ride the other account higher). "Just a more mechanical means of catching movement", he'd say. Never ran numbers comparisons for this style, and it seemed to require a lot of patient attention, so maybe scalping what you could out of the Qs daily would be a better overall move. Any thoughts?
wohc,
Got the general idea from A BEGINNER'S GUIDE TO SHORT-TERM TRADING by Toni Turner (don't know how much "cred" she might have, as she strikes me as a beneficiary of the tech boom years), passed it on to the aforementioned guy, who then toyed with it systematically. He used the Qs because he wanted something with big liquidity that moved out nicely along with the indices (his "three-day/170" contrarian pattern holds true a surprising amount of the time). Claimed this style would make over $600.00 a day, assuming an average of four (4) trades per day, but he was always vague about fills and total commission costs (talked about many a three-cent scalp). It seems basic enough, but, until you posted, I'd never heard of anyone who'd put it into actual practice. May I ask how it's worked out for you?
Got the general idea from A BEGINNER'S GUIDE TO SHORT-TERM TRADING by Toni Turner (don't know how much "cred" she might have, as she strikes me as a beneficiary of the tech boom years), passed it on to the aforementioned guy, who then toyed with it systematically. He used the Qs because he wanted something with big liquidity that moved out nicely along with the indices (his "three-day/170" contrarian pattern holds true a surprising amount of the time). Claimed this style would make over $600.00 a day, assuming an average of four (4) trades per day, but he was always vague about fills and total commission costs (talked about many a three-cent scalp). It seems basic enough, but, until you posted, I'd never heard of anyone who'd put it into actual practice. May I ask how it's worked out for you?
Quote from tminuspi:
Wanted to know if this was possible: keeping long and short accounts for holding the QQQQs overnight to take advantage of pre-market movement. I've read a few books that claim this can work, and the Qs would seem to be the ideal vehicle. Can't find much info concerning the Qs (high liquidity, but no one confesses to trading them), so I'm wondering if this strategy has drawbacks (such as horrible fill histories, wicked commissions, etc.). Could (or should) something like this be better handled through automated trading? Any suggestions would be greatly appreciated.
Any book that has "beginner" in the title usually contians strategies that don't work. And if it were this simple, the big market makers would be all over it. They throw billions of dollars at any way they can use to make $$$, including arbing across instruments like the Qs.
Also avoid any publication that contains "things they don't want you to know" or "things they don't know."
rcanfiel,
Actually, the idea was pitched as an aside by the author in a Q & A-type example.
Perhaps the big market makers ARE employing this strategy? Especially if it makes them money. Even if it made a small amount, would that be such a terrible thing?
Again, I have no idea how fill orders (market or limit?) or total commissions end up playing out. Can stock simulators give one a general impression?
Actually, the idea was pitched as an aside by the author in a Q & A-type example.
Perhaps the big market makers ARE employing this strategy? Especially if it makes them money. Even if it made a small amount, would that be such a terrible thing?
Again, I have no idea how fill orders (market or limit?) or total commissions end up playing out. Can stock simulators give one a general impression?