Equivalents to SPY

Discussion in 'Trading' started by redbaron1981, Jun 30, 2015.

  1. Hello All,

    I have developed a system that appears to be working extremely well on the SPY. Being a conservative type I only wish to commit around 20% of my net wealth to my strategy. Using this strategy I am not afraid of using high risk at it is a robust system with a high hit rate.

    What I am looking at is using other highly correlated instruments to trade using setups that occur on SPY. The question is which one is best or at least here is how I see it.

    Trading stocks that are > 90% correlated would allow me to pick lower priced stocks allowing me to purchase a larger amount of shares. For example TY is trading in the 20's whereas SPY is in 200's.

    Leveraged ETF's could be used such as SSO and SDS but I have no experience with these and not to sure how liquid these products are.

    Using the ES futures which also has lots of leverage available.

    I could also use S&P 500 CFD's however there seem to be a lot of firms offering this with a 5 point spread. They can kiss my A&$.

    Has anyone been in a similar situation or have any advice in regards to using alternate product selection? There are many alternates to trading the SPY but I am not sure which one is the best. With regards to liquidity I generally trading in areas where there is plenty of liquidity coming in from the other side, however if I am using illiquid products as account size grows I don't want this to become a problem.

    On another note with our arbitrage friends keeping the correlations in place between these products is there anyway that I can use a formulae that would convert the prices of these products directly to the price of the underlying SPY? Basically I would like to identify entries and targets off the SPY and transfer those targets to the derivative I am using.

    I really would appreciate any information from traders who have found themselves in a situation similar to this before. Also I will not responding to any requests from traders asking questions pertaining to the strategy I use.

    Thanks in advance.
  2. I don't see why you didn't trade the /ES.
  3. I can trade the ES the question is which product is best as an alternative to SPY and is it possible to convert SPY prices to ES prices?
  4. samuel11


    Not pefectly equivalent, but have you checked XSP?
  5. jl1575


    UPRO (ProShares UltraPro S&P500); Currently at $67.
  6. loyek590


  7. Ok guys thanks for the posts.

    Just to clarify I know there are lots of equivalents but how would I go about transferring my strategy from SPY to the equivalent for example ES? The problem I have since my trade setups are not price based its not just a case of finding the equivalent Swing highs or lows or moving average etc.

    So if I identify a setup on SPY and have a .50 take profit how can I transfer this entry and take profit to the ES for example.
  8. I don't understand why you're not simply using SPY directly. Do you have a small account and SPY is too expensive?
  9. Yes that's it I could up my account size but then this also means using a greater percentage of my net worth which I would prefer not to.
  10. Couldn't you could trade odd lot size in SPY?
    #10     Jun 30, 2015