Stocks and indices have been in the spotlight for a very long time, especially since the broad market is continually edging higher. It’s not only that, though. The media is constantly reporting on how several companies or major indices are performing, causing a hype around them.
The S&P 500, a popular US benchmark, has recently reached a new all-time high, before starting to correct lower, while stocks such as Tesla, Disney, or Zoom, were very volatile, posting losses on the back of negative headlines. With that in mind, the question arises regarding whether traders should choose stocks or indices, and that decision should be made based on two critical aspects.
Low vs. high volatility
Since there is no ideal asset class, traders need to consider that indices carry low volatility, posting relatively narrow daily ranges. With few exceptions, these assets won’t fluctuate more than 1-2% on a regular day.
When it comes to stocks, things are completely different, as it is possible to see double-digit swings even during short periods like less than an hour. A good example is Tesla, which after an impressive move higher, slumped over 10% in a day. That happened because the founder and CEO, Elon Musk, conducted a Twitter survey asking its audience whether to sell 10% of his TSLA shares.
Alongside the comfortable volatility level for each trader, there is also a psychological component attached. You should be considering your risk tolerance and how you react especially when markets don’t perform as expected. Those with a low appetite for risk find themselves generating returns while trading indices, while traders comfortable to take greater risks will be inclined to trade individual stocks.
Brokerages facilitate stocks and indices mixing
Rather than choosing one of the asset classes, traders need to know that it is possible to blend them together, building a diversified portfolio and reducing the overall volatility. With brokerages like InvestingCrypto, it’s possible to do this using CFDs. They have hundreds of assets to choose from, including stocks, indices, FX, commodities, and cryptocurrencies.
InvestingCrypto has been in the retail trading industry for quite some time, which means it holds a vast expertise and insights into how traders can be supported to achieve their maximum potential. Online trading is an activity requiring knowledge, powerful trading software, and tested techniques, all provided by this broker at the time of writing.
The WebTrader is a solution designed by InvestingCrypto, promising ease of use and a lot of professional trading tools. It can be used on any device with no installation, facilitating account management from anywhere.
Also, the broker is aware customers need constant support via educational resources and provides market news, account managers, and a comprehensive education center. That means beginners can get initiated and expert traders can further enhance their benefits.
At a time when both stocks and indices are attractive asset classes, it may be optimal for people to find a way to take advantage of both, especially since InvestingCrypto provides a tailored environment to do so.