Thursday, December 10, 2009

Free SPY Proxy Trades

Regular readers know that I utilize the Schwab StreetSmart Pro platform for trade executions. This isn't a promo for Schwab, I just like their graphics, indicators, proprietary tools such as the hi/lo scrollers, dynamic ticker and option tools. Their strategy tester is . . well . . (sorry, Schwab) junk, which is why I also use TradeStation.
Despite being an ultra conservative company (Schwab has weathered the downturn better than most) they occasionally hit a home run with their product offerings.
One such product might be their new suite of ETFs that Schwab customers can trade commission free. While there are only 4 active ETFs and 4 more due in December, the expectation is that this portfolio will eventually increase to include ETFs reflective of other sectors, commodities, energy, etc.
Probably the most viable current Schwab ETF is SCHB, U.S. Broad Market, with a current daily volume of about 250,000 and .02 spreads, this is a mirror image of the SPY and NYAD on 5 & 10 minute bars. Next in the queue is SCHF, International Equities, which mirrors the EEM and which has a daily volume of about 125,000 with .03-.04 spreads.
Be advised that these ETFs have only been active since 11/03/09 and that much of the daily volume is probably Schwab trading with itself in an effort to validate the ETF and entice new dollars.
That being said, IMHO the SCHB does track SPY and NYAD very nicely (and plays well with the VIXEN) and offers a practical opportunity to avoid commissions, both for day and swing traders.

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