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I'm reading Bruce Babcock's book right now (Business One Irwin Guide to
Trading Systems). He makes the point that Moving Average-based trend
systems generally don't perform very well when applied to the S&P --
unlike most other markets it seems. This also accords with my own
experience, applying a couple of MA variations to the AMEX spiders
("SPY").
Another observation in considering trading the spiders intra-day I'd
make is the bid-ask spread is sometimes extremely wide ( 3/4 of a point)
leading to potentially disastrous slippage in the event you use a
trailing stop or have to "whack the bid".
Is there a "theoretical" reason for this I'm missing? (Other markets
are very liquid, yet don't exhibit this.)
Also -- since many do trade the S&P futures -- what techncial indicators
*do* seem to be more appropriate? Not asking for any "inside" details
of specific trading systems here! Just making an observation, and
wonder what others have found are better indicators to use (channel
breakouts? support & resistance oscillators, etc.) ?
Thanks and good trading,
-Ian MacAuslan
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