Diversify and Strengthen Your Portfolio by Trading Stock Indices

For investors, there are many benefits to trading a stock market index rather than a number of individual stocks. Not only does investing in stock indices take out the stress of looking for individual stocks, it helps diversify your portfolio, reduce risk, and can help you generate strong returns.

What is Stock Index Trading?

A stock index tracks either the broader market or a smaller sample. For example, the NASDAQ has more than 1,300 listed companies; the NYSE contains some 2,800 companies. Some are blue chip; others are high-growth. The Dow Jones Industrial Average is made up of just 30 industrial companies. The S&P 500, on the other hand, includes 500 of the biggest companies in the U.S.

A broad-based index includes all of the stocks listed on a particular exchange. A narrow-based index is limited to a small number of equities. Narrow doesn’t mean small. The Dow Jones Industrial Average is made up of 30 industrial stocks that represent nearly half of the total value of all U.S. companies listed on public exchanges.

While buying and selling a single stock helps you benefit from the individual trend, trading a stock index allows you to profit from an overall market trend. This means that the risk is diversified. It also means profit gains are going to be limited to the overall movement of the particular stock index.

That’s because an individual stock will fluctuate in price much more drastically than the broader market does. For many traders, stock index trading is the best way to diversify your portfolio.

Besides diversification and risk management, there are many benefits to trading stock indices. Futures are highly leveraged. You may only need to put up 10% of the value of the contract. What that means is, you can trade a larger amount of the underlying index than if you bought it outright.

Trading Stock Indices

Trading stock indices is popular. But you do not trade an index like you do an individual stock. Stock index trading is actually futures and options that track a specific broad- or narrow-based index.

You can trade stock market indices futures the same way you would other futures contracts. When you take a long position, you are buying the index at a fixed price now for expiry at a set date in the future. Taking a short position means you are selling the index at a fixed price now with an expiry on a set date in the future.

Many new investors shy away from trading stock indices because of the uncertainty and speculative nature of options and futures. By learning how to read the broader market, though, investors can learn how to make solid profits; whether the underlying index is going up, down, sideways, or is volatile.

That’s because, just like individual stocks, there are a number of different stock market index strategies you can employ to take advantage of market conditions. But it takes a lot of skill to be a successful futures or options trader. Without understanding how to read the broader markets and learning different techniques, stock market index trading can be confusing.

Learn-To-Trade.com: Toronto’s Stock Index Trading Experts

Studying stock market index trading in Toronto from the professionals at Learn-To-Trade.com can teach you how to track market trends and news, conduct thorough due diligence, and follow a disciplined trading approach.

As the leading and oldest provider of stock market training courses in Canada, Learn-To-Trade.com is led by licensed, industry professionals. Its extensive understanding of stock market index, futures, and options trading will provide you with the knowledge you need to create an informed, disciplined approach to the financial markets.

For more information on Learn-To-Trade.com, our stock market trading course and Lifetime Membership, visit the company’s web site at www.Learn-To-Trade.com. Or, you can contact us by phone at 416-510-5560, or by e-mail at info@learn-to-trade.com.

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George Karpouzis is the co-founder of Learn-to-Trade and has been personally providing education and mentoring to over 3000 members since 1999. George has been trading in the stocks, options, futures and forex markets using technical analysis since 1986. With the help of advancements in trading technology the Learn To Trade program is now accessible worldwide. His background and passion for teaching brings an invaluable asset to our members. George is constantly striving to improve the program content and develop new strategic relationships for the benefit of the members. Add me to your G+

Testimonial 1

Don’t hesitate jump into it right now. You will be glad you did!

Susan C

Learn To Trade
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2014-08-19T04:45:40-04:00

Susan C

Don’t hesitate jump into it right now. You will be glad you did!

Testimonials 2

The ongoing support has been the reason for my success

Patrick L

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The ongoing support has been the reason for my success

Testimonial 3

I wanted to let you know that I had taken your course in the fall of 2013. I took your advice and used demo accounts for the last quarter of 2013. I switched to real money trading account in the Near Year, when I finally felt comfortable. Following the lessons taught to me by you (don’t jump on a moving train, peaks and valleys, EMA..etc), I wanted to let you know that I have been successful beyond my own expectations. Thank you very much – taking the Learn-to-Trade course was, by far, the best decision I made in my business career.

Steven R

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2014-08-20T02:56:18-04:00

Steven R

I wanted to let you know that I had taken your course in the fall of 2013. I took your advice and used demo accounts for the last quarter of 2013. I switched to real money trading account in the Near Year, when I finally felt comfortable. Following the lessons taught to me by you (don’t jump on a moving train, peaks and valleys, EMA..etc), I wanted to let you know that I have been successful beyond my own expectations. Thank you very much – taking the Learn-to-Trade course was, by far, the best decision I made in my business career.

Joseph L

The past options and forex tutorials taught by George were very helpful. I find these tutorials invaluable for a busy person like myself. I was able to keep myself up to date and on track ready to continue the learning process. Thanks for all the help and keep up the great work.

Joseph L

Learn To Trade
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2014-08-20T10:36:37-04:00

Joseph L

The past options and forex tutorials taught by George were very helpful. I find these tutorials invaluable for a busy person like myself. I was able to keep myself up to date and on track ready to continue the learning process. Thanks for all the help and keep up the great work.

Harley S

The course is amazing. Where were you 30 years ago?

Harley S

Learn To Trade
5.0
2014-08-20T10:37:39-04:00

Harley S

The course is amazing. Where were you 30 years ago?

Partick M

I learned the basics I needed to trade successfully.

Partick M

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Partick M

I learned the basics I needed to trade successfully.

Iouri G

I like making money. I’m very happy, so far so good

Iouri G

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Iouri G

I like making money. I’m very happy, so far so good

Akos B

I learned things it would have taken me years to figure out

Akos B

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2014-08-20T10:40:05-04:00

Akos B

I learned things it would have taken me years to figure out

Robert B

There is always someone ready to answer my questions.

Robert B

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2014-08-20T10:40:59-04:00

Robert B

There is always someone ready to answer my questions.

Uldus V

I was impressed with the course’s professionalism and enthusiasm.

Uldus V

Learn To Trade
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2014-08-20T10:41:40-04:00

Uldus V

I was impressed with the course’s professionalism and enthusiasm.

Dean K

I wish I knew about trading as a business years ago!

Dean K

Learn To Trade
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2014-08-20T10:42:24-04:00

Dean K

I wish I knew about trading as a business years ago!

Peter P

Learn to Trade provided me with strategy, self-confidence and discipline

Peter P

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2014-08-20T10:42:57-04:00

Peter P

Learn to Trade provided me with strategy, self-confidence and discipline

Shelley P

I took your course in 2008 and loved it. Since then I have been using what I learned at Learn-to-Trade to nicely supplement my pension income. Wanting a carefree type of trading, I have for the most part just sold options and made a monthly income which is a nice addition to my pension. I know I never would have made this kind of trading income without Learn-to-Trade. Thank you!

Shelley P

Learn To Trade
5.0
2014-08-20T10:34:39-04:00

Shelley P

I took your course in 2008 and loved it. Since then I have been using what I learned at Learn-to-Trade to nicely supplement my pension income. Wanting a carefree type of trading, I have for the most part just sold options and made a monthly income which is a nice addition to my pension. I know I never would have made this kind of trading income without Learn-to-Trade. Thank you!

Amir

Hi George,

I just wanted to thank you again for the amazing work on the tutorials especially Options trading.   Prior to joining, I had underestimated the quality of the trainings but they certainly far exceeded my expectations. Only I wish I’d found you 5-10 years ago!
Learn To Trade
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2016-10-07T08:56:52-04:00
Hi George, I just wanted to thank you again for the amazing work on the tutorials especially Options trading.   Prior to joining, I had underestimated the quality of the trainings but they certainly far exceeded my expectations. Only I wish I’d found you 5-10 years ago!
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