Are there more risks with indices?

Not true. In fact, the opposite.

I think it's safe to say the "standard of market risk" for traders is the SP500 and/or the Dow 30. From there you either go for higher potential profit with higher risk or for less risk... the "equal weighted SP500" would be such a play as would a fund or ETF in Utilities... as well as bonds or some sort of "balanced" vehicle such as one that is part stocks and part bonds.

 

Isn’t balancing a diversified portfolio complicated and pricey, keeping aside the low rewards?

 

Can be @Ralf but different assets like bonds and stocks hardly react to the adverse effects in the same manner.

 

Like Launce said, these are good combinations to go for. Your portfolio’s sensitivity to market swings will be reduced because they move in the opposite directions.

 

So how many pips do you think should the stop loss be?

 

I think so too Mark. They come with high turnover that directly results in the higher expense ratios and higher capital taxes.

 

Also Terri, they’re more volatile and tend to fall sharply during recessions.

 

Based on my research, these equal weighted indices are slightly better for enhancing the bank balance over a long period of time, considering you can withhold the volatility.

 

It all sums up to the trading costs really. I’ve been trading indices with fxview and swissquote and their fee is comparatively low. Maybe the fees got overshadowed by the excellent performance of these indices.

 

The strategy’s quite simple. Just buy and hold them.