What is it?

Diversity with Stock Indices

Indices provide you an inexpensive access to a basket of stocks. Because it is a basket of stocks it provides you more risk protection than investing in a single stock. It provides with a diverse portfolio, within the equity’s investment class. We define “true” diversity when you invest in more than 1 asset class. Indices are similar to mutual funds or 401k funds. Indices typically have a particular purpose or theme.

NQ = Nasdaq 100
In general terms this index is basically a basket of the largest 100 technical companies.

ES = S&P 500
This is a broad index of about 500 of the largest (large-cap) companies traded on US stock markets. This index is mostly used to measure US stock market performance. S&P is short for Standard and Poor’s 500.

YM = Dow Jones Industrial Average (DJIA) or just “the Dow”
This is one of the oldest and most widely followed index in the US. It typically has about 30 companies in the index. We consider 30 too low a number to be considered for long-term trading.

RTY = Russell 2000
This is an index of US Small-Cap stocks. And as the name indicates, it has about 2000 companies. Small-Cap stocks are more interest rate sensitive than large-cap, but can outperform during a expanding economy.

RS1 = Russell 1000
This is an index of US Large-Cap stocks, it has about 1000 companies.

RSG = Russell Growth
This index is a blend of US Large & Mid-Cap stocks. It focuses on stock that are define as Growth stock base on their projected growth.

RSV = Russell Value
This index is a blend of stocks capitalizations. It focuses on stock that are define as Value stocks base on their current value.