I was reading a thread on Elitetrader this morning from someone who said it is a lot easier to make money from trading US Stocks than it is by trading the Dow or the S and P because the indices are very choppy intraday and unpredictable. He couldn't understand why smaller traders would want to compete with the big boys trading the hardest money competition (s@p) in the World. I am inclined to agree with him but what do others think and what US Stocks do you think trend the best ?
growltiger
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Choppy trading
Unless you pick stocks which in general display lower volatity than the index you are presumably going to be riding more of a tiger by trading individual stocks than by trading the index they compose. Diversification may then get you out of trouble, but the portfolio performance will asymptote towards that of the index as the diversification increases. Meanwhile, you have multiplied dealing costs and the complexity of your trading. On the other hand, the idea of actively trading low-volatility stocks seems strange. Also the idea that indices behave more choppily than individual stocks is one that does not seem to chime with experience. But I could be wrong about all this.
Unless you pick stocks which in general display lower volatity than the index you are presumably going to be riding more of a tiger by trading individual stocks than by trading the index they compose. Diversification may then get you out of trouble, but the portfolio performance will asymptote towards that of the index as the diversification increases. Meanwhile, you have multiplied dealing costs and the complexity of your trading. On the other hand, the idea of actively trading low-volatility stocks seems strange. Also the idea that indices behave more choppily than individual stocks is one that does not seem to chime with experience. But I could be wrong about all this.
Mr. Charts
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Don't forget, schoe, anytime you want advice just let me know; I'm always very happy to help you all I can.
Richard
Richard
Naz
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Hi Schoe,
You already know the answer from me.I believe you only make profit from something that moves and if you do your homework and use a scanner you should be homed in on stocks that are poised to move.
Nasdaq stocks move.Get the right ones and they'll move more than any index.
Good luck.
Naz
You already know the answer from me.I believe you only make profit from something that moves and if you do your homework and use a scanner you should be homed in on stocks that are poised to move.
Nasdaq stocks move.Get the right ones and they'll move more than any index.
Good luck.
Naz
This is true Naz. I guess it depends if you are looking for occasional valid signals for potentially large moves, or to develop a method that aims for a higher number of smaller wins/moves. Probably depends on if you have the discipline to sit around for a big move, or feel better with a more active approach. But Im talking approach here, not asset classes.
Naz
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I think there is some very good money in going for the intra day swings in Nasdaq stocks.They are so cheap to trade, for me even if you're going to run a position for several days its better to be out at the end of the day to save any problems with the market or stock gapping overnight.
Then you get in the next day and continue another intra day run.So a three day run could be made up of 3 intra day runs.With the position protected every night.
Then you get in the next day and continue another intra day run.So a three day run could be made up of 3 intra day runs.With the position protected every night.
elliottmillion
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in my experience, i have used indices to get the gambler out of me!
whilst trading us stocks and uk stocks i have the occasional bet on the indices to keep me out of trouble, and to satisfy that gambling urge that i feel in this job.
does anyone else do this?
whilst trading us stocks and uk stocks i have the occasional bet on the indices to keep me out of trouble, and to satisfy that gambling urge that i feel in this job.
does anyone else do this?
Rhody Trader
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I've day/swing traded index futures with some success over the years (though I haven't seen many good set-ups lately for my particular strategy). I've taken to focusing more on the options side, though, and sticking with individual stocks. The options cost less and, as a result, tend to have more short-term punch than options on the indices.
Rhody Trader
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The base initial margin requirement for US stocks, as set by the Fed, is 50%. Brokers, however, can go higher in particular shares if they are deemed excessively volatile. I believe this applies long and short.
Note, however, this is for positions carried overnight.
Don't know the specific policies on day trading. I've heard it's much lower, but cannot speak from experience.
Maybe someone else can chime in.
Note, however, this is for positions carried overnight.
Don't know the specific policies on day trading. I've heard it's much lower, but cannot speak from experience.
Maybe someone else can chime in.
4:1 , 2:1 . So effectively , we are talking about a few grand $ , for any stock worth trading - that is with the 2 vols.
that's fairly expensive . what's the deal with SB's ? if you could do the same stock in decent size , and low margins , could be worth it .
confirms what I always thought , whatever way you look at it , stocks in the big markets are primarily investment as opposed to trading vehicles . that's why the large margins. but that's the pay off I guess - more expenses for more trending vehicles , less expenses for more volatile ones.
for most people , I bet the latter applies more.
note : in SG and MY , you can trade full stocks on the main boards , with credit and 3 day settlements .
in effect a stock futures contract defacto .
the service you'll get though is pretty crap , as it would be for all retailers .
we are treated worse than would be by the SB's.
that's fairly expensive . what's the deal with SB's ? if you could do the same stock in decent size , and low margins , could be worth it .
confirms what I always thought , whatever way you look at it , stocks in the big markets are primarily investment as opposed to trading vehicles . that's why the large margins. but that's the pay off I guess - more expenses for more trending vehicles , less expenses for more volatile ones.
for most people , I bet the latter applies more.
note : in SG and MY , you can trade full stocks on the main boards , with credit and 3 day settlements .
in effect a stock futures contract defacto .
the service you'll get though is pretty crap , as it would be for all retailers .
we are treated worse than would be by the SB's.
danfreek
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If anybody feels 50% margin is too much, then try individual stock futures from oneChicago. I know you can trade them through IB, but I don't know for tradestation, although I don't see why not. They only have 20% margin both long and short, no up tick rule and no day trading rule. I believe the commission from IB is about $1, minimum balance it £1250. One contract is worth 100 shares, so as far as I can see, it's possible to build a smaller position than even spread betting (i.e. $1 per point), with lower commisions too. The only thing to remember is that the contracts are for physical delivery, so it's wise to close out the position before expiry if you want cash.#
I've just looked on their website, and found that tradestation do offer individual stock futures but for higher commission ($2.50) and a higher minimum balance ($5000-$10000)
I've just looked on their website, and found that tradestation do offer individual stock futures but for higher commission ($2.50) and a higher minimum balance ($5000-$10000)
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You can also trade CFD's on stocks you only need 2-10% margin, I've been doing this for some time now, I also trade NQ/ES futures but find it much easier making profits on nice breakouts in stocks like that Disney move last week, a $1 pop in one day makes a good profit and it doesn't gap very often like tech stocks.
stocks can be better in certain markets than indicies , but not in others , I find that doing the large liquid ones in a bull market very good , but then again you need the margins to be of good value .
in a volatile market , stocks can be like thick syrup compared to the raging torrents that the indicies can be.
so , as always no one thing is a panacea for all things , horses for courses.
in a volatile market , stocks can be like thick syrup compared to the raging torrents that the indicies can be.
so , as always no one thing is a panacea for all things , horses for courses.
