Does QQQ follow a distinct trading pattern?

Discussion in 'ETFs' started by shotse, Apr 25, 2011.

Does QQQ follow a distinct trading pattern?

  1. Yes

    9 vote(s)
  2. No

    2 vote(s)
  1. shotse


    I have been researching QQQ for the past month and it seems that QQQ follows a very distinct trading pattern. Does anyone else see this ?

    Also when I am down with my research I will submit it to this site for you guys to check out and to give me your opinion.

    Thanks and let me know what you think.

    Does QQQ follow a distinct trading pattern?
  2. I have identified so far about 100 distinct patterns in QQQ. Which one do you mean?
  3. 1) 3-0. :confused:
    2) The pattern you "see" will stop as soon as you begin trading with a funded account. :eek: :(
  4. shotse


    Like for example:

    The opening price is relatively close or lower than the closing price.

    During the day the price of QQQ tends to meet it's lowest price at around 10am Eastern Time. (A few charts confirm this, I haven't really went any deeper into this yet, but I will be doing more research on this soon.)

    At around 12pm-1pm Eastern Time QQQ tends to not move around that much, then picks up it's pace after 1pm. (I think the reasoning behind this is because of major instituions and traders taking their lunch break.) I can exploit this by scalping shares. Buying and selling at a small increase in stock, like $0.01-$0.05 increase. Rinse and repeat.

    QQQ is the most Volatile at its open.

    My theory is that I can exploit these things happening and actually be profitable. Please let me know what you think.

    Buy @ 10am Eastern Time and do research the night before to find out a fair price to buy stock at.

    Sell @ $0.25 price increase in price.

    Stop Loss @ $0.38 decrease in price.

    With my theory I believe that you can buy and sell stock in large lots to gain a nice profit increase over a short period of time ranging from 1 hour to 2 days.

    Please let me know what you think about this..I am going to begin the testing phase of this theory soon so any criticism and advice or information about QQQ would be very useful.

    Some background information about myself is that I am 18 years old and I have been trading actively for 1 year in a live market and I have been paper trading for 2 years. Finance and investing is my passion and I'm always looking to innovate the market.

    How I plan on testing this theory is to backtest, open up a paper trading account and trade using that strategy on there, print charts out for a long time frame to see if my theory is correct.

    -Adam Shalit
  5. shotse


    I am trading with a funded account.
  6. 1) Your method can work some of the time but not all of the time. You'll have to be able to grind through your trades and see how consistent you can be.
    2) Instead of backtesting in the past, look at new data only, going forward, so as to avoid hindsight bias in your testing.
    3) To risk more than you expect to profit can be a "problem".
    4) You may have too much of a bullish-bias towards the market also. :cool:
  7. shotse


    1 - I do agree it might not work all the time, but what strategy will? I will be using a paper trading account to see how consistent I am without risking any capital quite yet.

    2 - What do you mean by looking at new data only?

    3 - How can risking more than I expect to profit be a problem? Can you explain this a little bit more? A tad bit confused.
  8. shotse


    I agree I do have too much of a bullish bias towards the market. I guess I have a bullish-bias towards the market because I believe that the natural way for things to go is up. Plants grow and plants die. Companies grow and companies die. It's the law of nature and common sense in a way. All good things must come to an end too.

    But you are absolutely right. I need to change that if I want to become a more successful trader. Thanks for that tidbit of information! :)
  9. 1) The market is 95% always dull around lunch time... this isn't really a pattern, its just natural at that time for it to be slower.

    2) Once again, the market 95% is ALWAYS most volatile at the open and close, as thats when the large traders are trading, and that is when funds move their money.

    3) The strategy you have built is call an INITIAL BALANCE TRADE. Basically, 70% of the time, the high or low of the trading day is made from 9:30-10:30. So, the only question is, are at the low or the high of the day? So what you can do is BUY at 10:00 if the overall trend is up on the daily, and SELL SHORT at 10:00 if the overall trend is DOWN on the daily.

    This again is a FACT in the markets. Think of the market like an auction. The first 60 minutes usually determine the beginning of value and will most likely be the start of a move from one direction or another.

    What your doing is good however, just watch one market and take notes all day. Over time you'll notice things ;).

    So I would assume you started trading when you were 15? Nice! I'm 14 right now ( been trading for 3 years) and I just love the markets! Cool that you started early as well!

  10. shotse


    You know a lot of information. How did you learn so much? Any books or classes or anything you can recommend to broaden my knowledge about trading?
    #10     Apr 25, 2011