Why stock index trading at all? Most stocks react to movements of the index, but they have a band of random noise overlaid. Trading the stock index is easier than trading the main tech stocks.
While it may be a good strategy to get into growth stocks by using the index as a trading signal, day trading of these “mature momo stocks” like Apple and Baidu is difficult. The Nasdaq index simply runs more smoothly than its big components.
Understandable, buy and sell thrusts of individual stocks are averaged out of the index. The result is indeed that single stocks have a random jitter in the time range of seconds to days overlaid on top of the index-induced direction. Of course, they have also in the long run their own fate. That’s why growth or trend investing is also interesting.
Trend trading works better with clear swings and trends. Every pullback and even exaggerated intraday swings of the index increase the risk to get stopped out of a trend that is still going on.
There we are. Exaggeration of intraday swings. That is the enemy of index traders, but it could also be their friend. With a specific day trading technique you could turn the disadvantage into your favor. Suddenly the small ripples of the NASDAQ Composite that get drastically increased by everything like the QQQ and even more so the index futures become “positive slippage” for you. This can become a money machine for earning a “dynamic spread”.
Nonetheless, day trading is difficult and futures trading requires additionally a disciplined money management. Basically that means that overtrading is forbidden. That should not be so hard to achieve, one might think, but the real world of futures trading looks strangely different. If you know that you tend to be too optimistic, futures are probably not for you.
Day trading is an art, even more than other sorts of trading. You will have to learn it. A good trading system is the start, but that is for most of us not enough. A good help could be a trading room that teaches a sound intraday futures trading strategy. This system uses small pullbacks for the cheap entry into still running trends.
Try it. Trend trading can be pure power and if you master it with intraday trends, you have your steady lifelong income stream, even during stock market downturns or financial crisis’.