I Wish I Had Learned to Trade This First

A while ago I wrote a blog post about Starting Over. There are a lot of things I wish I had known when I started my trading career.  One thing I wish I had done was to learn how to trade 8*$SPY - 13*$IWM. This is my favorite trading vehicle. I think most traders should keep this spread on their screens.  The trading apprentice should play with it in a sandbox. Here is the statistical run-down on it:

For a larger image, click here.

Here is a graph of this spreads at a shorter time scale:

If you want to become a professional trader, there is a lot to learn.  When you are first starting out, SPY-IWM is a great product because it is liquid, easy to understand, can be traded on a short (but not instant) time-frame, and provides lots of opportunities to make money. It will help you learn some of the subtle yet important aspects of trading, such as:   

• Setting probabilistic and symmetrical stop losses 
• Emotion and it's impact on the market
• Liquidity gaps and spikes
• Pricing lags in one security versus another
• Changes in the market environment, and how to adapt your strategy
• Intraday time windows

What is your favorite trading vehicle?

Written by Michael Bigger. Follow me on Twitter and StockTwits.

Comments

[eva]

nice information and hints... Thank you for this help...

[Michael Bigger]

cool