S/B DOW v SP500

[java]

I've just found this board and have read a lot of interesting comments regarding spreadbetting the various indices. I have been paper trading for a few weeks and after trying the DOW, I found I had more success with the SP500 index.

I realise some posters here disregard paper trading, but as with most people here, I'm trying to hone my skills before starting with cash. I've been using Trick/Trin and VIX indicators to give me a time when I should (or shouldn't be trading) and then candlesticks and MACD + RSI to work out entry and exit points.

I'm not sure why it's been more successful with the SP500 though. 😀

 

[steve-th]

Hi Java
I am prob. one of those that has demeaned paper trading. I don't wish to give the impression that it is a waste of time. In fact it is prob. the essential 1st step. but that is all. The danger as I see it is that after some success at it one gets the feeling of having "cracked" the system and piles into the market only to find that dealing with real dosh shows you there is much more to learn. This is what happened to me!!! However if you learn by losing a bit and treat as an educational cost then great.
Regarding your question about S&P v DOW I am no expert as now deal only in shares but may have something to do with the fact that DOW is an unweighted average of only 30 shares and therefor not v.representative and S&P is weighted average of 500 shares.
Good luck, Steve

 

[SP23]

Also the spread on the S&P is lower (% wise).

I too have recently moved my interest from the Dow to S&P and am interested in what other have to say.

 

[madasafish]

S&P?
More volatiile (as Nasdaq stocks included)
better spreads.
much more liquid..so I think charts better
But leads Dow so you need better TA skills
and candles can be very wide.. a 1 min candle of 2 points, 3 mins of 3 are quite common..
and beware spikes

DOW
Easier to trade as S&P follows first
Bigger spreads
less volatile


Personally I prefer S&P..
S&P 2000 hi 1500 now 930 so 40% move
Dow 11,000 to 8800 30%

What more can I say ...and LOTS of very good TA on Spoos .. much less on DOW

 

[Naz]

I find trading the indices a little bland at times.Why play draughts when you can have the excitement of playing chess with Nasdaq stocks using level 2 direct access.To me there is more than taking an intra day trade.Why not have the skill of using the screen to work your order and therefore eek out those extra profits out of the market that have remained the domain of the market makers for so long and at the same time see potential moves before they appear on the charts?But then i would say that wouldnt i!

 

[ChartMan]

You cream the MM's NAZ, and we'll cream the SB's 🙂

 

[ihickling]

Lead Index

Just a personal observation you can benefit by watching Nasdaq Comp/SPX/INDU all at the same time as no one always leads.

Sometimes one breaks support/resistance or breaks out of a flag/pennant ahead of the other two

might pay to have all 3 charts up.

PS: If you are trading a nasdaq stock using L2 then I presume a major breeak could help in trading an individual stock as well, perhaps Naz could answer that?

 

[Naz]

Ok here's my input and i hope it may help.

Of course i'm always looking at the s&p and Nas futures and any major break should be looked out for.BUT i'm always looking for that something that is slightly different .

ie A sector that dosnt want to participate,a major index that suddenly diverges, a general that isnt trading like the overall market and in the Nasdaq watching MSFT and INTC like a hawk.Because if they falter the Nas 100 falters and that can cuase a divergence from the S$P and the Dow.

Many on this board will remember that it was the Nasdaq's divergence from the other two indices that started a major down trend in March.The island reversal which the Nasdaq made is in the market chat thread at that time.

If MSFT and INTC are so important to the Nasdaq then it makes sense to be able to view them and understand the way the are driven by watching them on their respective level 2 screens.Doing this puts you ahead of the game and not behind it.

Take yesterday for example. If MSFT has a $2 run in a day thats good.So if it reachs the whole number ie $52 how do the players feel about taking it through.You guessed it they didnt want to know.That was evident from the level 2 screen before it appeared on a chart .At the same time INTC is middle range bound and due for its normal flip flop.So if one was trading the q's this was a good indication that at that moment it was a good one to take profits on any longs.Looking at the other two major indices didnt matter.

It was also a good time to think about closing out any longs in other Nasdaq positions.I prefer to watch those two level 2 screens for my direction of the Nasdaq100.I want to see in advance how the big named mm are setting themselves up to play important support and resistance levels.When they've made up their mind i'll take my position and then no doubt when they transact at those levels their trades will be reflected in a chart price and the rest of the market players without level 2 Nasdaq will then be able to see the outcome slightly behind,pause whilst their favourite oscillator confirms the move, pay a spread,take their trade in some antiquated way and guess what it'll be the level 2 scalpers and mm that will be selling to them.

Intraday trading involves having the best and i mean the best,market trading information and exucution software to put yourself ahead of the game not behind it! Otherwise you will be losing the edge and money on every single trade taken which will slowly eat into your account. Of course this is only a personal view. 🙂

 

[options]

Naz.
Could you clear something up for me?
Are these the cash daily or september charts you are looking at?

I presume they are the daily cash charts. But presuming anything in this game can cost you dearly.

Thanks in advance m8.


Options.

 

[options]

Interesting article on using a level 2 screen.


http://www.pristine.com/aeduc/level2/


Options.

(How's your battle going for the free L2 screen going Naz?)

 

[java]

Naz,

I've never used level 2 so am at a real disadvantage here, but could you please clarify a couple of points:
Have you found that trading the Nasdaq is by far the best option and if so, from whom do you obtain level 2 access and how much does it cost - monthly and to start trading? Are you also able to use the same setup for index/futures trading?

Thanks.

 

[options]

Not to worry Java;
Most of us on here, myself included are TA people who work off the charts. And a whole host of 'em in the afternoons trade the dow cash.

Naz is merely educating us lesser mortals in the virtues of the L2 screen, which is for usa stocks, and if msft and intel are both going the same way, it's a fair bet to say that the index (nasdaq) will be going the same way too.

Will the other indices follow suit?

Well that's been an area for discussion on another board.

I believe Naz has the benefit of both L2 and charts.

And one more question for you if I may Naz.

On that link I posted earlier about the L2 screen. It says in there that the bonds (I presume it's T bonds) provide support for the stocks. So if bonds are up then stocks are too. (In general).

But how do the bonds fair against the Dow/S&P etc?

Not such a silly question, because while the dow and the s&p have been going down this afternoon, the bond has been going up.

And now as I write the reverse is true. Dow etc going up, bonds coming down.

Can you or indeed anyone else clarify?


Thanks.


Options.

 

[Naz]

Crikey Guys so many questions.

Please remember that these are just my own personal views and i trade Nasdaq stocks mainly.I'm still working at trying to get free level 2 data for Nasdaq stocks available on a web site so you can all view it.

I find that trading Nasdaq stocks the best option for me.Strong stocks in a strong market and weak ones in a weak market.My broker is on exptrader.com.The set up dosnt allow trading the futures but allows you to trade index tracking stocks.ie q's

MSFT and INTC control nearly 20% of the Nasdaq 100.So understanding how they play can give you a window on the Nasadaq 100 index.Indeed about 8 stocks make up 40% of the index so i keep an eye on those as well.

Finaly ,yes i do have the benefits of both charts and level 2 direct access.which is why i say that you should have the best of everything so that you can get a true picture of what youre trading.Right now i've got fib levels on the $ndx.x,MSFT ,INTC and there all holding.When the trading gets fierce forget the charts give me a level 2 screen with direct access any day.

Both have their place using them together now you're flying!