MARKET INSIGHTS
The fear index — measures expected S&P 500 volatility •
Key concepts for understanding the market
Drawdown is the fall from a peak to a trough before that peak is recovered. It measures the real "pain" of an investment and lets you compare funds or strategies beyond raw return. Use it to set position size and tolerance: the deeper the historical drawdown, the more important diversification and an exit plan become. You can check it for free on Portfolio Visualizer (backtests), or look up definitions on Investopedia.
The 200-session moving average (SMA 200) is the average closing price of the last 200 days and acts as a long-term trend filter. Above it, the reading is usually bullish; below it, bearish. In practice it helps you avoid buying against the trend and schedule rebalancing, entries or exits with discipline. You have it free on TradingView by adding the moving average indicator, and also on the charts at Yahoo Finance.
Volatility measures how much a price fluctuates (standard deviation, for instance); risk is the chance of losing capital permanently (bankruptcy, dilution, poor management). To decide, use volatility to size positions and set your time horizon, and assess risk through fundamentals, debt and business quality. Free: Cboe publishes the VIX as a gauge of expected S&P 500 volatility, Portfolio Visualizer shows standard deviation, and you can check material disclosures at the CNMV or 10-K/10-Q filings on EDGAR (SEC).
Correlation shows how two investments move relative to each other, from -1 to +1. High correlation means you are diversifying less than you think; low or negative correlation can soften portfolio drawdowns. Use it to build a more resilient portfolio (mixing equities, fixed income and commodities) and to spot "false diversification" across similar sectors. You can get correlation matrices free on Portfolio Visualizer and see how they shift across periods.
Beta measures how sensitive an asset is to a benchmark index: a beta of 1 tends to move with the market; above 1 amplifies both rises and falls; below 1 tends to be more defensive. It helps you adjust market risk exposure, estimate expected returns (CAPM) or size hedges. Check it free under "key statistics" on Yahoo Finance by swapping the ticker, and confirm the context with regulatory filings on EDGAR.
A stop loss is an order or exit level that caps your loss if the price moves against you. Use it when trading on a short horizon, when your thesis is invalidated, or when you want to impose discipline on emotional decisions. It works best on liquid, continuously traded assets (large caps, ETFs, futures) and is less reliable in thin liquidity or with gaps. Avoid placing it "too close": base it on support levels, volatility (ATR) or a fixed percentage. As a practical step, you can review support, resistance and trading ranges on TradingView before setting the stop loss.