etf Day-Trading ETFs?

[metph86 0]

Hi All,

I am currently looking at wether to trade individual stocks or ETFs.  From general chart research and technicals, the top 20 ETFs in terms of volume and ATR seem to have exactly the characteristics that we are looking for in individual stocks (i.e. high liquidity/volume, ATRs above 0.50$ on a daily basis, many with prices per share between 10 and 100$).

From a chart research, pretty much all of the most traded ETFs (https://finviz.com/screener.ashx?v=171&f=ind_exchangetradedfund,ta_averagetruerange_o0.75&ft=4&o=-volume) seem to follow the common rules such as bouncing off MAs, respecting support and resistance, etc. etc., plus they do not look like HFT and liquidity is a multiple of the liquidity of a typical 10-100$ stock in play. Therefore my thinking is that I would focus primarily on 8-10 ETFs for 3-4 sectors/indices on a daily basis, to become very familiar with how they behave, to become knowledgable in these 3-4 sectors/indices and in doing that I would ensure maximum efficiency and consistency. Plus, since they track a portfolio of individual assets / stocks, in my mind exposure to sudden spikes and squeezes can be reduced when trading ETFs as sudden news in respect of one company (e.g  tweets by Elon making TSLA plummet in seconds) would not have such a huge impact as they would have on an individual stocks.

What do you think ? Am I missing something ? I know that the BBT team typically does not trade ETFs but other than that are there any issues with the above that you could think of ?

Looking forward to your opinions 🙂

Warm greetings from Luxembourg !

Philipp

 

 

[RTrader 20]

Hi Philipp, 

I will add my 2 cents on the ETF list you have. In general ETFs are best for swing trading. Be careful of any VIX ETFs, TVIX, UVXY, VXX. These are great day trading products when the market is volatile. But they don't move exactly inverse of the market since they are a derivative of the VIX options market. They make excellent swing trading though. Some of the other sector ETFs like EWZ are not really liquid enough to trade intra-day. They have a lot of gaps. If you decide to trade QQQ, SPY, or IWM, you can just simply trade the micro futures contracts that just came out this week. A much better way to trade indexes with hardly any money, and no PDT or big risk like the full size E-mini. Chances are you will probably find more trends trading stocks intra-day than most ETF's so I think that's why most people prefer stocks.

 

Jason

[metph86 0]

On 5/8/2019 at 7:35 PM, RTrader said:

Hi Philipp, 

I will add my 2 cents on the ETF list you have. In general ETFs are best for swing trading. Be careful of any VIX ETFs, TVIX, UVXY, VXX. These are great day trading products when the market is volatile. But they don't move exactly inverse of the market since they are a derivative of the VIX options market. They make excellent swing trading though. Some of the other sector ETFs like EWZ are not really liquid enough to trade intra-day. They have a lot of gaps. If you decide to trade QQQ, SPY, or IWM, you can just simply trade the micro futures contracts that just came out this week. A much better way to trade indexes with hardly any money, and no PDT or big risk like the full size E-mini. Chances are you will probably find more trends trading stocks intra-day than most ETF's so I think that's why most people prefer stocks.

 

Jason

Thank you Jason for you message, I will keep that in mind 🙂