Question of the Week: 9/15/2010

Why are NEoWave Hourly and Daily trades quoted in futures while Weekly trades are quoted in ETFs? Why not all the same?


Each market trading vehicle (i.e., stocks, futures, options, ETFs) has its own, ideal, minimum/maximum time horizon for trading. Many stocks do not move enough to allow for low-risk, high-potential trades on hourly or daily charts. But, due to the leveraged nature of futures and options, small market moves can produce big gains, so they are ideal for short-term trading on hourly and daily charts. Options are extremely time and volatility sensitive, so they are best suited for intra-day chart trading. Futures work well on nearly any time frame below weekly, but because futures contracts expire usually within 1-3 months of becoming the most active contract, weekly chart may only experience 4-12 bars before the contract expires. Since non-leveraged ETF's don't expire, and most have extremely low holding costs, you can hold them indefinitely, which makes them ideal for Weekly, Monthly and Yearly chart trading. For the reasons listed above, all NEoWave Trading services quote futures for Hourly and Daily-based trades while the Weekly time-frame addresses ETF trading. At some point, if there is enough demand, I might direct NEoWave Hourly trades to the Options markets.

Click here to view NEoWave's Question Of The Week archive