Are there more risks with indices?

[elizabethf]

Idk I haven’t had much experience in that area but if you can just use stop loss, you might end up saving yourself from any loss.

I’m not denying the importance here but let’s not forget that even a short-term fluctuation in your stock’s price could easily activate the stop price.

 

[morkel635]

I’m not denying the importance here but let’s not forget that even a short-term fluctuation in your stock’s price could easily activate the stop price.

Buddy the key in this case is to pick up a stop-loss percentage that helps your stock to fluctuate daily. This alongside preventing the downside risk involved.

 

[shelleybrown]

Buddy the key in this case is to pick up a stop-loss percentage that helps your stock to fluctuate daily. This alongside preventing the downside risk involved.

Exactly. What traders don’t understand is that setting a 5% stop-loss order on a stock that comes with a history of nearly or more than 10% a week fluctuations won’t be one of the best strategies. Leave aside making money; you'd rather end up losing money on the commissions from executing the stop-loss order

 

[Overnight]

...

The only thing I can think of is stay away from the market for the next few mth., and some CNBC commentator said the market will done its consolidation by end of June...

Thanks for that brilliant hindsight analysis.

I mean seriously, thank the daylights out of you for that BEAUTIFUL AND PRESCIENT CALL, AFTER THE NQ HAS ALREADY DROPPED 10%

You are, seriously, the MASTER of all things finance.

Now have a steaming hearty cup of STFU.

 

[Happy Hopping]

Thanks for that brilliant hindsight analysis.

I mean seriously, thank the daylights out of you for that BEAUTIFUL AND PRESCIENT CALL, AFTER THE NQ HAS ALREADY DROPPED 10%

You are, seriously, the MASTER of all things finance.

Now have a steaming hearty cup of STFU.

I'm guessing, you lost quite a bit in this past week

 

[shriekpurser]

Stop loss can be a powerful tool for saving your trades and there are no such rules for placing the sl. It entirely depends on you and your risk tolerance. If you’re going for a short position, you can use a stop-buy order. Try to look at some videos and read a bit about it first. I keep using sl for my trades and It recently saved me from incurring losses on price action with Fxview and I also used ATR indicator to be on the safer side. Also used the trailing stop loss with IG and I must say there was some improvement on my chart.

You’re right here Morkel. In fact I’ve been able to make better trading decisions (keeping my emotions at bay) with stop-loss order. I just love stocks and many more traders would feel the same, but won’t deny that it does create an allusion that it’ll come around if we stick to the failing ones for a little more while. When in reality, the delay just results in us losing up on money.

 

[markteshorn]

Did anyone try the stop loss limit order? I find it way better than the stop loss order. Unlike the latter, with fxview, swissquote I could place the stop loss limit order at the stop loss price. This helped me get rid of the slippage problem.

 

[Scataphagos]

Well, by definition indices should be less risky than individual stocks because they are diversified (i.e. holding a basket of stocks), however, dig deeper in the index you are looking at and you will find wonders.

For example, the S&P500 top 5 holdings are Apple, Microsoft, Amazon, Facebook & Tesla. I don't have the weights of the those top 5 (It's not published and it's a pain to manually calculate).

However, the point is that, those top 5 constituents weights combined will be around 20% (Ballpark).

It's clearly a skew, since what happens with those 5 companies greatly affect the index, hence, it's not as diversified as it should be.

Another point, the Technology sector weight in the S&P500 is around 27% and Healthcare is around 13.5%. So 2 sectors only are 40% of the index, it's again a skewed exposure (At this point in time because the weights do change).

The SP 500 is a "cap-weighted index", so of course it's skewed towards the largest companies (there are ETFs which are "equal weighted", if one wants that). No real faults to either. Anyone can find more "concentration/specialization/leverage" as they wish.

 

[MarkDawn]

The SP 500 is a "cap-weighted index", so of course it's skewed towards the largest companies (there are ETFs which are "equal weighted", if one wants that). No real faults to either. Anyone can find more "concentration/specialization/leverage" as they wish.

Why would anyone go for the equal-weighted ones? What’s the benefit in there?

 

[elizabethf]

Well @Mark I hardly think there’s any difference between these two except for the fact that there’s a limit on the price at which they’ll execute.