Trading spread on indices. How much?

balusa

Junior member
23 0
I respect the professionals, but I still want to trade in cash indices, despite the fact that it is not a common occurence in trading. I have good reasons to believe that I will do successfull trades here :). So, could you please explain why it is riskier to trade in indices than in ETFs.
Thank you.
 

zow

Active member
136 0
But an 'index future' is not an ETF.... maybe I really don't understand your question.
And a liquid ETF is going to track the cash index very closely as will the future, so what's the problem?

Cash indices are not themselves traded on any exchange in the world which makes them riskier.
 
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Trader333

Moderator
8,658 984
Balusa,

You cannot officially trade an index. Any company that offers index trading is either:

1) Creating their own version of it for you to bet on
2) Using a variation of the Index future to base the price on it

I dont know why you are sensitive to this. I also studied Index behaviour and found that it would have been easier to trade if there had been a true index instrument to trade as opposed to the Index future. The closest you will get will be with a SB company in my view.


Paul
 

stevet

Established member
917 5
balusa

you can trade the pure cash index - but not with any company that comes under US or European jurasdiction

and to some extent you have had your original question answered - you want to trade the cash index - no one seems keen - you have been told it is expensive - no one had any other names for you - but you want to do it anyway and you already have a company who you said can do it

go for it - make tons of bucks and come back and buy all of us a drink
 

balusa

Junior member
23 0
Ok, that cleared things up a bit. Thanks.
Stevert,
I will keep you posted on my trading results.
 

Bigbusiness

Experienced member
1,408 23
I can't seem to get that 0 spread on the DIA. Would be grateful for any info on how to get it.
 

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stevet

Established member
917 5
you cant exactly "get" zero spread on the dia - but occasionally the spread will go to zero or could even cross - but it could pull way out - same as the qqq

and it dont mean that much because zero or crossed spreads only happen occasionally when no one is sure whats gonna happen - so may not be the best time for you to rush in for a trade - and just because you might get in on a zero spread - dont mean you will get out on one - might be two points - could be anything

i am not sure why the zero spread was pointed out - since the orginator of the thread was only interested in the cash index and the diamonds are no more related to the indu ( dow cash) than the futures contract is - in fact the diamonds is far more related to futures than the cash -but it still runs in its own little world regardless

the dia does have liquidity - but not the leverage of futures - so you are far better to trade the s&p emini - best leverage and liquidity
 

Bigbusiness

Experienced member
1,408 23
I haven't seen a time when there was even a small spread on the DIA. I hope Naz can give us some more information about how he gets it.
 

Naz

Experienced member
1,391 24
Hi Bigbusiness,

Probably the reason i can get zero spread at times is because i use a level 2 Nasdaq screen and include three of the major ecn books into the screen to give it more liquidity.
 

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stevet

Established member
917 5
as i said - he doesnt get it as such - his post was just misleading -since he was making it sound like you could take advanatge of that all the time - you cant -as you have seen - its a cent or 2c normally or more - but if you watch it all day - you will probably catch it at zero at some point

but even then sugesting that there is an advatage of it being at zero is a bit misleading as its not really zero - since either the ask or bid is gonna be right - so depending on wether you go long or short - you might be at the right price and next moment the spread will pull out to 2c and you really entered a 2c spread

and of course you still need to exit the trade- a lot forget that - and you could get sqeezed for 2c or more there - you never know
 
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stevem12

Active member
135 1
On the subject of the DIA, it may be more liquid than the YM, BUT don`t forget about the leverage. You need 500 "shares" of the DIA to get the same leverage as 1 YM contract. If you look at the volumes, they are 100x the YM, but the YM`s leverage is 100x the DIA! So is it really more liquid?

Also I would imagine it, the SPY`s and the QQQ`s are all subject to the rules on PDT, so if you want to day trade them without $25,000 you can forget it.
 

Naz

Experienced member
1,391 24
Doing the same thing with the QQQ gives me this.
The problem occurs with many that they dont understand all the things that you can do with a level 2 Nasdaq screen and doing this is just one of them.
 

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Bigbusiness

Experienced member
1,408 23
What about using the DIA for longer term trades with smaller stakes? Might be better than spread betting.
 

stevet

Established member
917 5
you will find them more liquid - but at the end of the day - i know the yms have their fans - so i will just mention the es in passing!

and yep - with the dia - you will be subject to 25K min with 4 to 1 leverage with a retail broker such as IB , but you can short them though
 

stevem12

Active member
135 1
BB

If you are trading longer term and are profitable, then SB`s would be better surely? The dealing costs on the DIA may be less, but the longer you hold a position the less costs impact, and don`t forget TAX. :eek:
 
 
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