Discussion in 'Trading' started by wirelessbull, Nov 4, 2001.

  1. Is anyone trading iShares developed by Barclays Global Investors ? It looks like they offer an excellent variety of trading possibilities including overseas markets. You can trade iShares intraday and use market, limit, and stop orders. iShares can be sold short, even on a downtick. I just requested an information kit. :cool:
  2. Htrader

    Htrader Guest

    Main problem with ishares is a serious lack of volume. IVV, the ishares for the S&P 500 index, only traded 90,000 shares on friday, and all the other ishares trade even less frequently, sometimes only a couple hundred shares a day.
  3. tntneo

    tntneo Moderator

    these are good for buy and hold or core trading long term.
    However, the volume is so low, it is sad. Performance might be good but usually spread is not. SPY is broader but so much more liquid.

    iShares are interesting when you want to diversify (why make it so complicated for long term investment is beyond me, but OK, that's just me). Still, mutual funds are often a better choice (think RYDEX). ETF are easier to buy though, I wish IB would offer mutual funds for this long term account we should all have.

  4. ishares trading :

    Here's my experience with trading iShares and other ETF's ( aside from QQQ ).

    Someone said, there's a lack of volume in many ETF's , iShares.

    I wouldn't say, that volume doesn't matter with ETF's, because high volume assures small bid / ask spreads.

    But liquidity itself is not an issue, since these stocks track certain indexes and bid / ask is continually updated according to the underlying sectors / index movement ( not tick by tick though ).
    So in essence, there's always a market and if you want to buy market and sell market, sell short market, executions are very fast ( through IB and DATEK at least ).

    If you check bid / ask, you'll find always large volumes on both sides ( something like 5000,10000 or 25.000 shares on either side )

    The only perk is, that for some, less liquid, iShares and other ETF's, the spread is quite high compared to high volume stocks like MSFT or the QQQ's. But not significantly higher than with many lower volume stocks.

    However, since iShares and other ETF's are best used to capture multiday/week moves in sectors or to create a diversified portfolio as an investment, you have to develop a trading strategy which fit's to these time frames.

    If one would have bought SMH 3 weeks ago to play the anticipated recovery in the chip-sector, he would have done very well, even if he would have paid a spread of 1% or 1.5%.

    Likewise, when the oil price started to drop a few months ago, one could have sold OIH short ( without uptick ) to play the oil-service sector , who's suffering from this development, to the downside.

    As for intraday trading :

    Some ETF's ( besides QQQ ) possess enough volatility to trade intraday swings ( not scalping ).
    But most ETF's spreads are so wide, and intraday volatility is so low, that intraday swingtrades may not pay for the spreads + commission.

    Another point to consider : ETF's are still marginable 2:1 , while some of the stocks they contain my be not anymore or are restricted to lower marginability ( i.e wireless and Internet sectors ).

    Another longterm method to play i.e. Holders is, to cancel the holders and to have the underlying stocks delivered into your broker account. Afterwards you can sell the non-performing part of this portfolio. Since holdes trade only in round lots of 100 shares/lot, it's easy to have them split up and to receive the underlying stocks. However, there are some rules to consider before asking to change the holder into underlying stocks.

    More info and