I like to trade indexes by using ETFs. For instance, I am comfortable trading SPY for SPX index. I am looking to diversify and back test on these Indexes and trade their ETFs if successful: I am specifically looking at: ^MERV Merval (Argentina) use ETF ARGT which has small volume. ARGT has such a small volume, can I trust to get in because I want to trade on Merval? My major concern is being able to get in and out of these ETFs daily on a buy or sell signal and not have to worry about not able to get out. Also, these specific ETFs have small history compared to their Indexes, if I backtest on the indexes, can I reliably use this testing results to think that these results will be the same on their ETFs. Thank you, Larry
I guess my question is that 5,000k is very small. However, since it is based on the index would I be getting filled based on Index prices or would the small volume be impacted by say 2000 share buy?
(1).15-.20 spread on 31 price (.4-.6%)(might be different earlier in the day) (2)300 size on bid/ask (would want to scale in/out with 300 or less) (3)weekly chart is decent (tradable) (4)5-minute chart is untradeable (still able to exit/enter if willing to give up .15-.20) (5)comparison chart (ARGT-^MERV) similar pattern but different results the longer you hold (compare on tradingview.com)
Bkr, Let's say the Index is at 150, 000 and the ETF is at 31. So if I placed a large trade on the ETF the asset (based on it's low trading volume) will the ETF increase significantly because of slippage for the buy. So would I get maybe filled at 31.20 or could it go crazy to 32 or 33? When does the ETF go back to the index price? PS. I am a position trader and keep my trades usually for 2-6 months. If I put a limit buy in at 31.20 when the current price is at 31.20, would it take all day to get filled? Thank you, Larry
Here is an article that might help. https://am.jpmorgan.com/us/en/asset...s/etf-investing/education/true-etf-liquidity/
ph1, Good article. Just confused on figuring out if a ETF is liquid for an index, saying "I think I should check with a broker on that". I don't "like that answer".
%% NO\ not a good idea to trade that wide a bid \ask+ small volume; + same reason a realty apraiser NEVER gets just one home comp[small volume of comps.] OK for an investment; no problem on exit just plenty of slippage to the max. ILF is tradable,20 year data; SPY= liquidity leader. Wisdom is profitable to direct; but easy to get a good fill if market reverses on our order I did an exit on semi liquid[ 444k av day volume] DRLL today/ good uptrend but plenty of intra day gaps/bid /ask gaps
This is tradable as a swing trader (which you are) but you need to use limit orders on thinly traded markets. No reason to push the price to 32, 33, etc... by using a market order. So if the current bid/ask is 31/31.20 I'd start by placing a limit buy for 100-300 shares at 31.10. Adjust to 31.20 if not filled. There are times when they won't even fill a buy order on the ask. I had screenshots to prove it. If they fill the first order, watch what happens to the bid/ask. Sometimes they'll bump it higher even if the underlying index didn't rise. Depending upon how much you want to buy/sell, this can take several/many trades to get your desired position. If they bump the price higher after the 1st fill you may want to set limit orders @ market and lower and walk away. The index may drop & get you filled. Try it for a few days until filled unless you want to get all filled TODAY then you may have to pay up a bit depending upon how much your broker is willing to fill. I usually take a partial position to get started then place multiple limit orders a bit lower. May adjust higher the following day if I think the market is moving away from me without a pullback. Stop losses cannot be used.
Can't get blood from a stone, holding period 2-6 months pay up already. Geez. Or ... find another ETF with decent vol.