Day Trading QQQQ
Day trading qqqq is one strategy option. I've heard this question often: "Since we are watching the overall market for trends and direction, why don't I just trade qqqq?"
The reason this stock is mentioned is because it is a fund that closely parallels the overall performance of the market. That is what it is designed to do. If the market is bullish, then the price of qqqq goes up. If the market is bearish, then the price of qqqq goes down.
As I write this article in the fall of 2008, day trading qqqq can be a good option. The reason is the market's volatility. The day trader needs volatility in order to make a profit. The day trader needs movement. The bigger the movement, the larger the opportunity for making a profit. So, since the market is experiencing triple-digit volatility within a matter of hours, qqqq can be a good stock choice if you know how to trade using the technical indicators. I do not suggest trading any stock based on a gut feeling. So, don't trade qqqq because you think you know which direction the market will go. I hate to tell you, but you're probably not that good. However, by using the technical indicators, you can analyze the market and combine this information with your understanding of current news events.
You can chart the DJ-30 and other indices and compare this with qqqq. As you see a confirming pattern, you can trade qqqq either short or long. Since the volume of traded shares is large, the movement of the stock is more uniform, providing easier pattern recognition for the new day trader.
I have mentioned in another article that the newbie trader can learn how to trade stocks by choosing one company or one symbol. Choosing qqqq might be good for this training exercise. It is also part of an overall strategy that I call "Trading the Double-Helix" - but, that book hasn't been written yet.
If you'd like to see an example of the QQQQ chart, you can go to my Public Charts page
and scroll over to the QQQQ chart. It shows the ebb and flow of the NASDAQ very well.
If you'd like to see a video commentary on QQQQ, then see Worden's video analysis
day trading QQQQ.
If you want to study day trading strategies, other than day trading qqqq, then click this link.