TradingMarkets Everything You Need to Know About Trading ETFs: QQQQ and PSQ
If you remember the second half of the nineties, then the letters QQQ will likely stir up a host of conflicting emotions.
For many traders and investors during the technology stock bubble in the 1990s, the Cubes — as they were called — were THE place to be. A buy and hold investor looking for some exposure to the go-go tech boom? Just buy the Triple (now Quadruple) Qs. Technology earnings season around the corner and you don’t know which techie will beat estimates by the largest amount? Pick up some of the Cubes for a good shot at the action. Need a short term trading vehicle to trade every zig and zag as technology stocks soar higher (and slide lower)? Nothing handier than an ETF like the QQQs.
Tech stocks may not be as popular as they once were. But the PowerShares QQQ Trust Series 1, the full name for what are now known as the QQQQ
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As an exchange-traded fund, the QQQQ can be both bought and sold short. The QQQQ are very liquid — with trading volumes that are often second only to the SPY — and are optionable.
For more information on the PowerShares QQQ Trust Series 1 ETF, QQQQ, visit www.invescopowershares.com.
Once you have gotten to know the QQQQ, meeting the PSQ
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The PSQ is a short or inverse fund. But it is not a leveraged fund like many short or inverse ETFs. While this limits its ability to serve as an inexpensive hedge, tracking the Nasdaq 100 on a 1-to-1 basis still allows the PSQ to be used for many hedging strategies, as well as for short term trading and longer term speculation.
For more information on the ProShares Short QQQ ETF, check www.proshares.com.
Like the QQQQ, the PSQ is not only a way to get exposure to the Nasdaq 100. Traders and investors alike can use the PSQ as a way of taking a position vis-Ã -vis technology stocks in general, given the dominance of such stocks in the Nasdaq 100.
Coming Next: For truly high-powered exposure to the Nasdaq 100, traders run, not walk, to leveraged exchange-traded funds, just as they do with other market indexes and sectors. In the case of the Nasdaq, two of the more widely-traded leveraged fund come from ProShares: the UltraQQQ ETF, QLD
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David Penn is Editor in Chief at TradingMarkets.com.