Trading ETFs

G

gordo

Does anyone have any experience/insight into trading ETF (exchange traded funds)? I that they trade like stocks, but how are they for an active trading vehicle? Considering them for trading in my IRA and 401k if our company sponsors them in our plans. Thanks
 
gordo-
they're good to get a hold of a sector or foreign exposure(many of them are baskets of foreign stocks)...however a majority of them are ver illiquid
and don't forget, you can't short in retirement accts, so you'd be limited to longs

but if your looking to go long Japan or something, give 'em a shot...but you might be better off with a MF
 
you'll generally find that most of the ETFs and similar products (i.e. spdr's) are not very liquid at all, and thus kinda suck for active trading. in fact, so few people trade them that i wonder why they even have them. maybe it's to make the AMEX feel like it actually counts as an exchange. and because most of them are traded on amex, the spreads will kill you. this is because there's no consolidated quote - mixing no liquidity with no island visibility to non-daytraders is not a good combination. even if you wanted to try and scalp these stocks, most people who trade them wouldn't even see your bid or offer, since they aren't daytraders and are looking at whatever quote schwab, fidelity, or etrade is giving them.

you might check out load funds. they might end up being cheaper in commissions (and don't have spreads to eat your capital).
 
QQQ, SPY are very liquid. The rest are not. If you trade QQQ
SPY just trade emini for a scalp or trade options on futures.
I think many people are not quite sure the reasons for these
instruments. There were created to institutional traders for
huge money - to hedge. Never to daytrade !!!
Oh yes the amex specialists suck - bastards and thieves :D
 
The QQQ is the only real viable ETF for active trading because it has a very liquid island book, thus instant execution. Everything else will route you to the AMEX specialist, which by far is the worst among exchanges in terms of speed and execution.
 
I've actually had very good fills on SPY going through the NYSE specialist. I agree, never use the AMEX specialist - terrible fills always. SPY is not liquid on ISLD.
 
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