Just wondering why anyone would trade the former rather than the latter, apart from the ability to trade much smaller size?
The advantages of futures are many, including better liquidity and better tax treatment. One possible advantage for the stocks is that it may be possible to trade with a lower commission rate than with futures. For example, 800 QQQ might be done for no net commission (0.2 cps commission and 0.2 cps ECN rebate), while the same trade on the NQ's might cost ~$2-3. Another possibility is for those doing relatively short term trading in IRA's and are not able to do futures. Otherwise, it's hard to think of many advantages of using the stocks. -Eric
qqq, spy allows some traders to scale into/out of trades in a manner that is more comfortable for them while pehaps controlling risk, drawdowns in a smoother way. I'm sure there are other strategies too, where they're better suited. For effeciency, yes the futures are better.
One advantage, at least with the QQQ, is the relative ease of hedging with options or constructing any number of underlying/options combination strategies. The futures options are extremely illiquid. Clearly, that's not the case with options on the QQQ.
%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% Actually could make a case for trading all three & some trade all; Don Bright makes a good case for 90% stocks. Like occasional stocks & options; option taxes or commissions or even inferior liquidity are less important to me than 100% certainty of risk[ and 100% no way margin call ]with leverage on occasional options. Admit even the most liquid options are liquid enough ; but arent as liquid & have inferior long term data compared to other markets
very good question. I am looking at trading the e mini spoos - any feedback from scalpers trading this market would be very appreciated. Looks pretty liquid huh?
The reason I ask was due to the guy Don Miller on Tradingmarkets.com who says he trades the QQQs and SPYs for a living. I was wondering why a professional daytrader would use them instead of the futures.
"TradingMarkets" you have to realize tries to cater to the YAHOO FINANCE crowd of investors as well as the professional daytrader. Most Mom and Pop retirees never heard of an E Mini and are comfortable trading ETFs such as QQQ or SPY. Just my .02.