Does anyone have good data on which percent of SPY trades on ISLD ? Any experience with SPY on ISLD? Looking at the ISLD book it looks feasible for anything other than very short term trading.
When I first came off of the Mini I traded the SPY for a couple of weeks. Unfortunately, I would be routinely routed to the AMEX. HUGE MISTAKE! They are crooks. I got wise after a few insane experiences and moved over to the QQQ. Unfortunately, I've had simliar experiences on the QQQ, as well. I trade the 5 and 1 min. The liquidity in the SPY was just not there on Island or anywhere for what I was trying to do. For a longer position it may be fine, but every time I looked at it the spread was wide and the quotes I would get from IB would be all over the place.
QQQ and SPY you HAVE TO TRADE on ISLAND !!! Otherwise, just give your money to charity, help kids in need or something at least that will do some good. beside that, if you try to scalp these stocks you will hardly succeed. Indeed because of the spread and mostly because they are tracking stocks. So if the underlying index move, QQQ or SPY will jump directly to the new level. If you did not anticipate that, you loose. One way to anticipate it, is to watch very closely the futures. There are the ones moving the tracking stocks, not the index per se. There are ways to profit in very short term with QQQ and SPY, almost [or really] scalping them. But it takes an arbitrage strategy and a lot of skill. If you take longer moves intraday it is a little easier BUT the noise will fake you out many times [or you will use a large stop and loose even more]. Maybe what I want to say is this : you can make money daytrading the tracking stocks, many do, you have to realize that [they are usually on the other side !]. But it takes a lot of experience and you should be an advanced trader already. Beginners should stay away and trade volatile stocks [or NYSE stocks, they are underated as great daytrading possibilities]. With volatile stocks, if you can keep a small stop loss and have your winners be big enough, you can learn how to trade. QQQ and SPY just won't leave you any place for error or learning. imo. vpiNeo
If you want to trade these, just use island. There is very nice liquidity. Almost always there is 10k a nickle from the inside island. As for trading them. I will NEVER trade tracking stocks. The moves are too small, and I just have never made any money. If you were to trade them, I think that the options are better. Tight spreads, and limited risk.
As praetorian noted, the tracking stocks probably aren't worth the effort to daytrade because of their smaller trading range. However, they can usually be effectively swing traded over a multiday timeframe for good aggregate point gains if that's more to your liking. As always, stop management and incremental profit taking are very important. Probably not worth doing though unless you can trade at least 400-600 shares (800-1000 is even better). You also might want to check out a couple of HOLDRs - BBH (biotech) and SMH (semiconductors). They're not true tracking stocks, but they do generally correlate to the BTK and SOX indices.