How to perform every day
fund index trading ?
Tips for day trading
nasdaq 100 index etf
and SP500 index fund
Index ETF can be used for every day fund index trading. They can be used in swing trading strategies, but these index ETF shares could be utilized also for profitable day trading index strategies.There are plenty of index ETF shares available for trading. Different providers of exchange traded funds issued products that tracks same index. The most usable indexes for intra-day trading are S&P500 index, nasdaq 100 index, Down Jones Industrial Average Index and Rusell 2000 index. It is important to select suitable
index exchange traded funds
to be able to trade them during one day. The major points are good liquidity and good spreads. Based on these parameters I would recommend to use only these index ETFs: SPY, QQQ, DIA and IWM for day trading strategies.
Index fund day trading basics
The core of my every day fund index trading strategy is to use two major US index ETF. It is QQQ - PowerShares QQQ nasdaq 100 index exchange traded fund and SPY - SPDR S&P 500 index exchange traded fund. These two funds could offer nice daytrading opportunities several times a week and in some days also several times a day.
Relative strength in day trading strategies
The core of my SP500 and nasdaq 100 index fund day trading is build on using
relative strength.
Comparison of these two etfs during first minutes of the day will determine which one is weaker and which one is stronger. Next step is to decide what is
prevailing mood on the market,
if the market prefer to go up or to go down. And final step is to find good setup and realize trade.The major expectation is that when the market mood is bearish and we enter trade in weaker ETF then we could expect bigger and quicker move and have profits in our pockets quickly. Similar rule is used for stronger index fund when market mood is bullish. Here is example of situation of SPY and QQQ during one trading day
Now you have to compare both charts and especially situation in last minutes on both charts. Relative strength analysis could quickly help to determine that QQQ is weaker then SPY. The correct strategy is to go short QQQ as general trading mood is bearish. Any day trader should find best possible entry. One can be when QQQ will do new low for the day. Then it is possible to expect further drop in the price of QQQ. We can see result of such trade on next chart
QQQ did nice almost 1 point drop. It was good day trading opportunity.
When do not trade index ETF
I personally do not like to apply this type of day trading index ETF strategy when stock market already moved a lot during
pre market hours
and market opens with big gap up or down. I feel that all emotions that moving market during trading day are already exhausted by this huge gap movement and so there is not so much left for
regular US stock market hours
trading.You can see example of such action on the chart:
There are some day traders that use special techniques for trading gaps. These gap day fund index trading strategies are based on idea that most of the gaps tends to close. It is that price from the open tends to move back to highs or lows of previous day.
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