I currently trade 8000 shares of QQQ on Island once or twice a day. I hold for up to 90 minutes, often shorter, but never longer than this, regardless of my profit or loss to that point. I am fairly satisfied with QQQ on Island and have made money but am always looking to improve my results. My broker JRP Capital has started offering Emini trading and I am considering trading the Nasdaq Emini instead of QQQ. I have NEVER traded any type of futures before. I am looking for some advice an answers before I even attempt to make a switch. Any advice experienced traders can provide is welcome. I have several specific questions: 1. Would it be "cheaper" for me to trade the Emini instead of QQQ? In terms of lower brokerage costs? Lower spreads if I constantly decide to hit the bid/offer? (note - JPR offers round trips for $10, I know that is high, and am willing to switch to another broker if necessary in the future) 2. Would I find more liquidity trading the Emini? I currently have little problem trading 8000 QQQ efficiently before 10:30 AM on Island in the morning, but find its often difficult to trade 8000 shares late in the day without overpaying for them if hitting the bid/offer. And I plan to trade even larger blocks of shares in the future. More liquidity would be better. Am I going to find it with the Emini? 3. Am I going to be more confused trading futures? I realize there is going to be a learning curve that will take time. But I often wish the QQQ market moved a bit slower, prices move faster than I can type sometimes. Am I going to find futures prices swing even more rapidly, or does the speed of the price movement trading the Nasdaq Emini feel about the same as trading QQQ on Island? 4. Is there any advantage to trading the regular Nasdaq contract versus the Emini? My 8000 QQQ shares per trade equate to $300,000+ at current pricing. I could trade either 10 Emini contracts or 2 regular Nasdaq contracts. But everyone seems to love these Emini's. Why would I want to trade 10 Emini's versus 2 regular contracts? 5. Will I experience the same percentage move results over time? For example, if I buy both QQQ and the Emini at 10 AM and sell at 11 AM for 10 days in a row, will the sum of my 10 percentage moves in those 2 instruments basically be the same? I realize there might be a difference due to different brokerage costs, but I am talking about the percentage move results BEFORE taking into account brokerage costs. Because I am looking to get basically the same percentage moves with the Emini as I do with QQQ. Can I expect that to be the case? Thanks for any answers and/or additional advice.
In my view, e-minis are definitely superior trading vehicles to any stock, including a tracking stock like the cubes. To answer your points one by one: 1) NQ has significantly cheaper commissions (keeping the broker constant) than QQQ and you nearly always give up less to the spread. Don't forget QQQ is handled by a middleman/specialist and NQ's spread is generally just one tick because it is electronically traded without human intervention/manipulation 2) ES and NQ E-minis are as liquid as it gets in the USA. Between them, they trade 500-600K contracts/day. NQ gets around 200K of those, averaging 30K contracts an hour, 500 contracts a second. Because the average trade involves just 2-3 contracts, that's 200-250 individual traders each and every second buying or selling the NQ. If you want in or out at a fair price, it's not a problem whatsoever at any time during regular trading hours. 3) Yes, you might be a bit more confused trading futures. If you feel the cubes move too fast, then NQ will seem to leap exceedingly fast. Electronically traded NQ turns instantaneously on a dime often, the cubes, maintained by middlemen, take fractionally longer to react. NQ also can feature very rapid and brief fakeouts, and what I call 'glitch ticks' ----- erratic, random bounces that can sometimes lure you in under false premises or scare you out of a holding a correct position. QQQ can have those too ---- any trading instrument can and does ----- but things do happen exceptionally fast in the futures ----- putting the highest premium on great concentration and nearly instantaneous decision-making abilities. However, if you can trade the QQQ successfully now, your learning curve for NQ will not be that steep. You will just have to master a somewhat more intense dimension of quickness and rapid-fire capability. 4) Avoid the ND pit contract like the plague. EVERYONE prefers the minis because 1) Liquidity is much, much better; 2) Executions are virtually instantaneous, whereas as ND pit contracts can take up to 30 seconds to fill; 3) ND often lags NQ by as much as 30 seconds ----- there's far more uncertainty about your fill price in the big pit contract, and probably far more slippage on balance due to human intervention and relatively poor, lumbering liquidity. 5) Virtually by definition, yes, they will be very similar. To the extent that QQQ and NQ diverge significantly, arbitrageurs will quickly appear to rectify the imbalance. QQQ tracks the NDX and NQ is the futures contract based on the NDX ----- except for very brief periods, they must move in nearly perfect tandem.
armaniman said it all.... if I could throw in one more caveat: futures are taxed at a 60/40 blend. Very advantageous.
Not sure about this. If you mean the ND quote lags the NQ quote then yes, of course it does. But if you listen via squawk to the SP v the ES they move in tandem so no reason why ND and NQ don't move together. At the end of the day the ND has to lead because that's where the size gets traded.
armenian are you sure the the main contract lags the mini - i trade the S&P and the mini always lags the main contract how do you know the main lags - your data will lag since the data from the pit is delayed due to the delay of transaction to transmission
Stevet and the others, is it true that ES lags the Spoos? If it were true wouldnt it make sense to use the SP as a leading indicator for ES? Also the thing Ive always wondered about there is Big SP, mini, theres the SP index and SP "something". What of all theese things moves first? I also Heard about SP cash (is that the SPX?) What I mean is they are all derived from SPX so shouldnt the index move first, THEN the big and mini cointracts? THX Alex
the main sp futures contract - in the main - leads all the others - you could view it as a leading indicator if you wanted - but most people get confused, as of course there are delays on most data feeds for all SPs, apart from the emini - so u need to know what you are doing
1) Yes it would be cheaper and the spread are better; try Terra Nova institutional, they just lowered there commissions, send me a P.M. and I will give a a contact. 2) Yes, you will love the liquidity. 3) Just as easy but faster. 4) E-mini are electronic, you know what you are getting, pit trade will have more slippage. 5) Same.
If you stand in the pit and read the quote boards, the same quote information that is sent out, the pit will always trade ahead of the quotes. The lag depends on how busy it is, sometimes a few seconds, sometimes a lot. I would not say that either one necessarily leads, the arbs in the pit, of which there are quite a few, pick it off both ways.